BRUSSELS (MNI) – The euro remains a credible currency and price
stability is a key feature of it, Jean-Claude Juncker, the Luxembourg
Prime Minister and chair of the Eurozone finance ministers’ club (the
Eurogroup), said on early Tuesday morning.

Concerns about high debt and deficit levels in the Eurozone have
pressured the euro in recent weeks and the single currency fell to a
4-year low earlier Monday before retracing some of its decline.

“The euro is a credible currency, price stability has been fully
maintained and will be maintained in the future. This is a major feature
of the euro and a major asset for investors,” Juncker told reporters at
a press conference after the monthly Eurogroup meeting here.

Some investors fear that strong fiscal discipline, now being
urgently demanded in light of the euro area’s sovereign debt crisis,
will drag on economic growth and could hamper the Eurozone economic
recovery.

“It is worth underlining that even though fiscal consolidation is a
must…at the same time it is important that we practice differentiation
within the euro area,” said European Commissioner for Economic and
Monetary Affairs, Olli Rehn, who spoke at the same press conference as
Juncker.

Rehn said countries should make adjustments “according to their
fiscal space and other vulnerabilities. Countries with little or no
fiscal space should front load [deficit cuts],” while others with more
room to maneuver should be given more time, he said.

Forcing all Eurozone countries to trim their debts at the same rate
would “risk depressing economic growth and harm the recovery that is
currently underway,” Rehn said.

Juncker said that the member states of the Eurozone are ready to
disburse an initial tranche of bilateral coordinated loans to Greece,
under an agreement hashed out May 9.

Rehn said the first tranche of the aid for Greece would total E20
billion and be delivered on May 18. Of that amount, E14.5 billion will
come from the Eurozone and E5.5 billion from the IMF, he said.

Greece is “on the right track,” Juncker said, adding that the
Eurogroup will “keep a very close eye on all the developments” there.

New budget cutting measures taken by Spain and Portugal are
“courageous and demonstrate an adjustment trajectory that is
satisfactory,” Juncker said, adding that finance ministers would take a
final view on these new measures in June after the European Commission
had delivered its verdict on them.

Ministers also discussed the technical details of the Eurozone’s
E440 billion share in a E750 billion aid deal that they agreed on last
week in a bid to shore up the euro.

This E440 billion facility, guaranteed by Eurozone countries, will
be called the “European Stability Facility,” which the finance ministers
agreed to set up under Luxembourg law with the Eurozone member states as
shareholders, Juncker said.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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