TEXT-Full text of EU crisis mechanism agreement

BRUSSELS, May 10 (BestGrowthStock) – Following is a full text of the
agreement reached by European Union finance ministers on Monday
to prevent Greece’s debt turmoil spreading to other countries.

“The Council and the Member States have decided today on a
comprehensive package of measures to preserve financial
stability in Europe, including a European Financial
Stabilisation mechanism with a total volume of up to 500 billion
euros.

“In the wake of the crisis in Greece, the situation in
financial markets is fragile and there was a risk of contagion
which we needed to address. We have therefore taken the final
steps of the support package for Greece, the establishment of a
European stabilisation mechanism and a strong commitment to
accelerated fiscal consolidation, where warranted.

“First, following the successful conclusion of procedures in
euro area Member States and the meeting of euro area Heads of
State or Government, the way has been cleared for the
implementation of the support package for Greece. The Commission
has signed today, on behalf of the euro area Member States, the
loan agreement with Greece and the first disbursement will
proceed, as planned, before 19 May. The Council strongly
supports the ambitious and realistic consolidation and reform
programme of the Greek government.

“Second, the Council is strongly committed to ensure fiscal
sustainability and enhanced economic growth in all Member States
and therefore agrees that plans for fiscal consolidation and
structural reforms will be accelerated, where warranted. We
therefore welcome and strongly support the commitment of
Portugal and Spain to take significant additional consolidation
measures in 2010 and 2011 and present them to the 18 May ECOFIN
Council. The adequacy of such measures will be assessed by the
Commission in June in the context of the excessive deficit
procedure. The Council also welcomes the commitment to announce
by the 18 May ECOFIN Council structural reform measures aimed at
enhancing growth performance and thus indirectly fiscal
sustainability henceforth.

“Third, we have decided to establish a European
stabilisation mechanism. The mechanism is based on Article 122.2
of the Treaty and an intergovernmental agreement of euro area
Member States. Its activation is subject to strong
conditionality, in the context of a joint EU/IMF support, and
will be on terms and conditions similar to the IMF.

“Article 122.2 of the Treaty foresees financial support for
Member States in difficulties caused by exceptional
circumstances beyond Member States’ control. We are facing such
exceptional circumstance today and the mechanism will stay in
place as long as needed to safeguard financial stability. A
volume of up to 60 billion euro is foreseen and activation is
subject to strong conditionality, in the context of a joint
EU/IMF support, and will be on terms and conditions similar to
the IMF. The mechanism will operate without prejudice to the
existing facility providing medium term financial assistance for
non euro area Member States’ balance of payments.

“In addition, euro area Member States stand ready to
complement such resources through a Special Purpose Vehicle that
is guaranteed on a pro rata basis by participating Member States
in a coordinated manner and that will expire after three years,
respecting their national constitutional requirements, up to a
volume of 440 billion euros. The IMF will participate in
financing arrangements and is expected to provide at least half
as much as the EU contribution through its usual facilities in
line with the recent European programmes.

“At the same time, the EU will urgently start working on
the necessary reforms to complement the existing framework to
ensure fiscal sustainability in the euro area, notably based on
the Commission Communication to be adopted on 12 May 2010. We
underline the importance that we attach to strengthening fiscal
discipline and establishing a permanent crisis resolution
framework.

“We underlined the need to make rapid progress on financial
market regulation and supervision, in particular with regard to
derivative markets and the role of rating agencies. Furthermore,
we need to continue to work on other initiatives, such as the
stability fee, which aim at ensuring that the financial sector
shall in future bear its share of burden in case of a crisis,
also exploring the possibility of a global transaction tax. We
also agreed to speed up work on crisis management and
resolution.

“We also reiterate the support of the euro area Member
States to the ECB in its action to ensure the stability to the
euro area.”

Penny Stocks

TEXT-Full text of EU crisis mechanism agreement