The Eurogroup will have to wait and see what Italy’s next political steps are, what its government will do and what its president decides, President of the Eurogroup Jeroen Dijsselbloem said Monday.
Attending a Eurogroup ministers’ meeting in Brussels, Dijsselbloem’s remarks came after Italian Prime Minister Matteo Renzi said he would resign after losing Sunday’s constitutional referendum.
“I don’t believe it [referendum] is the beginning of a new crisis. There is no reason for that. Political instability makes it more complicated for Italy and the euro zone. But it is a new reality we have to work with,” Dijsselbloem said.
Pointing to moderate market reactions so far, Dijsselbloem stressed the Italian economy, with its strong institutions, was one of the largest in Europe.
The Eurogroup chairman also said the euro states would have to wait for the next steps from the Italian government and president, and added: “The Italian situation hasn’t changed economically; the banks are no different today than they were yesterday.”
“There’s no systemic risk to the euro,” French Finance Minister Michel Sapin had told reporters before the meeting.
Sapin claimed the Italian referendum was a vote against a change in the country’s constitution, not on EU membership, and added: “Italians are still in favor of the European Union.”
“Italy is a profoundly European country,” he added.
Meanwhile, Germany’s Finance Minister Wolfgang Schaeuble remarked that Italy should follow its reform policies even after the resignation of Renzi, and called for others to respect the Italians’ decision.
Also on the agenda in Brussels was a review of Greece’s debt-relief plan.
European Commissioner for Economic Affairs Pierre Moscovici said that there had been significant progress towards a conclusion of the second program review.
Despite Moscovici’s positive outlook Schaeuble said Greece must become competitive in order to regain market confidence, adding that reforms should be implemented and agreed upon with lenders.
“For Greece it is a long and difficult road,” he added.
Greece has received billions of euros from previous bailout programs and is currently serving the third bailout phase of €86 billion [$92 billion].
In order to continue receiving funds, Greece has to pass reviews in order to cover its debt which is estimated around 180 percent of its GDP.
Greek government spokesman Dimitris Tzanakopoulos in a radio interview said: “We have explicitly stated that we are not going to satisfy the IMF’s demands regarding additional measures and the labor issue.”
*Hajer M’tiri in Paris and Magda Panoutsopoulou in Athens contributed to this report. SOURCE