Gold Magazine January - February 2014, Issue 34 | Page 43

programmes”, noting especially to the
sharp increase in youth unemployment in
Greece, Cyprus and Portugal, and instructs
the President of the European Parliament
to forward the draft resolution to the
Council and the Commission, and to the
European Central Bank.
They emphasise that the draft report is
a basis for subsequent political discussions,
delegations to relevant Member States and
hearings of various stakeholders in the
beginning of 2014. “It records the history
and state of play, but it does not attempt
to draw final conclusions or recommendations which are to be drawn following substantial work in the coming months.” 
In relation to the report, the two rapporteurs, supported by Jürgen Klute
(Germany) and Nils Torvalds (Finland),
will be visiting Cyprus on 9-10 January
and meeting, among others, House Speaker
Yiannakis Omirou, Members of the House
of Representatives, Finance Minister
Harris Georgiades, representatives of the
Central Bank of Cyprus, depositors in
Laiki bank and Bank of Cyprus, former
Finance Ministers and the members of the
Committee of Enquiry that looked into the
causes of the financial crisis in Cyprus.
In the report, a proposed Motion for a
European Parliament Resolution on the
role and operations of the Troika (ECB,
Commission and IMF) with regard to the
euro area programme countries, states that
the European Parliament:
1 Considers that the precise triggers
for the crises differed in all four Member
States;
2 Notes that, prior to the beginning of
the EU-IMF assistance programme initiated in the spring of 2010, there was a dual
fear associated with the ‘insolvency’ and
‘non-sustainability’ of the public finances
of Greece as a result of the constantly
declining competitiveness of the Greek
economy and decades of imprudent fiscal
policy, with the government deficit reaching 15.7% of GDP in 2009, and the debtto-GDP ratio continuing on an upward
trend since 2003 when it stood at 97.4%,
reaching 1297% in 2009 and 156.9% in
2012;
3 Notes that Greece entered recession
in Q4 2008; notes that the country ex-

perienced six quarters of negative GDP
growth rate in the seven leading to the assistance programme being activated; notes
that there is a close correlation between
the increase in public debt and the cyclical downturn, with public debt increasing
from EUR 254.7 billion at the end of Q3
2008 to EUR 314.1 billion at the end of
Q2 2010;

“The European
Parliament deplores
the unpreparedness
of the EU and
international
institutions,
including the IMF,
for a sovereign debt
crisis of a large
magnitude inside a
monetary union”
4 Notes that, at the beginning of the EUIMF assistance programme, the Portuguese
economy had suffered from low GDP and
productivity growth for a number of years,
and that this lack of growth, combined
with the impact of the global financial crisis, had resulted in a large fiscal deficit and
a high debt level, driving up Portugal’s refinancing costs in capital markets to unsustainable levels; notes in this context that in
2007 Portugal’s growth rate reached 2.4%,
its fiscal deficit 3.1%, its debt level 62.7%
and its current account deficit 10.2% of
GDP, with the unemployment rate standing at 8.1%;
5 Notes that, at the beginning of the
EU-IMF assistance programme, the Irish
economy had just suffered a banking crisis
of unprecedented dimensions, causing
Irish GDP to fall by 6.3% in 2009 (1.1%
in 2010) from a positive growth level of
5% of GDP in 2007, unemployment to
increase from 4.7% in 2007 to 13.7% in
2010 and - its most detrimental impact
- the government balance of payments to
experience a deficit in 2010 of 30.6%,

down from a surplus in 2007 (0.2%);
further notes in the decade prior to the assistance programme that the Irish economy
experienced a prolonged period of negative
real interest rates;
6 Notes that, at the beginning of the EUIMF assistance programme in 2013, speculations about the systemic instability in the
Cypriot economy had been ongoing for a
long time, owing inter alia to the exposure
of Cypriot banks to overleveraged local
property companies, the Greek debt crisis,
the downgrading of Cypriot government
bonds by international rating agencies, the
inability to refund public expenditure from
the international markets, and the initial
reluctance of the government to restructure
the troubled financial sector;

EU-IMF financial assistance,
content of the MoUs and policies
implemented
7 Notes that the initial agreement between the Greek authorities on the one
side and the EU and IMF on the other was
adopted on 2 May 2010 in the relevant
MoUs containing , the policy conditionality for EU-IMF financial assistance; further
notes that, following five reviews and the
insufficient success of the first programme,
a second programme had to be adopted
in March 2012, which has been reviewed
three times since;
8 Notes that the initial agreement between the Portuguese authorities on the
one side and the EU and IMF on the
other was adopted on 17 May 2011 in the
relevant MoUs containing the policy conditionality for EU-IMF financial assistance;
further notes that the Portuguese programme has since been reviewed regularly,
leading to the combined eighth and ninth
quarterly reviews of Portugal’s economic
adjustment programme;
9 Notes that the initial agreement between the Irish authorities and the EU and
IMF was adopted on 7 December 2010 in
the relevant MoUs containing the policy
conditionality for EU-IMF assistance;
further notes that the Irish programme has
since been reviewed regularly, leading to
a twelfth and final review on 9 December
2013 marking the imminent completion of
the Irish programme;
10 Notes that the initial request for finan-

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Gold 43