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Annual report 2024

The annual report includes descriptions of the ESM's activities and policies for the year, along with a selection of topics relevant for the reporting year and a personal message from the Managing Director. The report also includes the audited financial statements for the year, accompanied by the external auditor's report and the Board of Auditors report on the financial statements.

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Highlights
2024 year in review
Former programmes
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A word from the Managing Director

“The ESM is committed to supporting the euro area and its members as effectively as possible, ensuring a safer, more prosperous future for all.”

Pierre Gramegna
Managing Director
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Preparedness key to economic resilience

Long-standing global economic relationships have begun to erode, weighing on growth, limiting governments’ financial flexibility, and posing risks for financial stability. Europe’s future prosperity hinges on navigating the more fragmented world economy, building resilience against climate change, and contending with the social impact of ageing populations. Europe can face these challenges and bolster its capacity to absorb shocks by deepening the single market – including capital and banking markets – and engaging more in ambitious European projects for sustainable growth. In this new era, the ESM has taken steps to maintain its readiness to support the euro area and its members amid changing circumstances. The ESM undertook a comprehensive review of its toolkit and updated its risk assessment framework in order to anticipate and address the threats to financial stability posed by today’s challenges. 

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Toolkit review image 2024 AR

ESM reviews its ability to address future challenges

In view of the volatile economic landscape, the ESM – following a request by the Board of Governors – conducted a comprehensive review of its ability to help Members manage economic shocks. While pronouncing the ESM’s lending capacity and toolkit adequate for addressing current challenges, the review found value in the optimisation of certain tools to further buttress euro area resilience. One focus was on refining the precautionary assistance tools to combat the early stages of financial instability at the national level. The review also examined how the indirect bank recapitalisation instrument could be used to manage the financial impacts of climate change. Work to develop further technical proposals for consideration by ESM Members is currently in progress.

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Insights on addition of euro commercial paper programme to ESM funding tools

New STEP logo for 2024 AR

Insights on addition of euro commercial paper programme to ESM funding tools

To diversify its funding sources, the ESM launched a euro commercial paper programme in 2024 of up to €20 billion. Maturities range between one week and two months, giving investors a shorter-term alternative to the three- and six-month bills that form a cornerstone of the ESM’s funding operations. The ESM’s euro commercial paper programme has obtained the highest possible short-term ratings from the rating agencies and obtained the Short-Term European Paper (STEP) Label, ensuring transparency and standardisation of practices for investors. While the programme’s current focus is on euros, there is the possibility for the ESM to issue in other currencies in the future.

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AI conference image 2024 AR not cropped

ESM securely taps artificial intelligence to equip it for future

Combining innovation with responsibility, the ESM has started to use artificial intelligence (AI) to handle routine tasks and enhance staff skills. While the emphasis is on buying off-the-shelf AI tools, the ESM has also created a prototype of an AI-powered chatbot that, once scaled up by professional developers, could support economic research and data analysis. Keen to explore the potential of this new technology while conscious of the risks, the ESM established its first AI policy in 2024, laying down best-practice governance standards to guard against misinformation and protect intellectual property and privacy.

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Macroeconomic and financial environment

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Macroeconomic and financial environment

Challenging global conditions persisted in 2024, with rising geopolitical tensions casting a shadow over the world economy. As inflation tapered off across the major economies, the European Central Bank, along with other central banks, started to ease monetary policy. Economic activity in the euro area staged a moderate rebound, supported by foreign demand, though growth diverged from country to country. Euro area governments made headway with the consolidation of public finances, and the euro area financial sector remained resilient. Looking ahead, growth is expected to remain modest in 2025 as real income growth, the monetary policy easing cycle, and the implementation of EU Recovery and Resilience Facility funds face global headwinds. Heightened global uncertainty amid ongoing geopolitical conflicts and the threat of escalating global trade tensions cloud the outlook. 

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ESM introduces euro commercial paper programme.

ESM and Asian Infrastructure Investment Bank renew Memorandum of Understanding on the sidelines of International Monetary Fund and World Bank Spring Meetings in Washington DC.

ESM and European Parliament sign a Memorandum of Cooperation.

ESM co-organises 8th joint Regional Financing Arrangements research seminar in Luxembourg on safeguarding stability in a more fragmented world with the ASEAN+3 Macroeconomic Research Office and the Latin American Reserve Fund.

ESM co-hosts two-day capital markets seminar in Luxembourg with the European Commission and the European Investment Bank.

At 12th ESM Annual Meeting, the Board of Governors discusses comprehensive review of the ESM's financial assistance instruments, lending capacity, and capital adequacy; agrees to further work on findings. Board of Governors also approves the 2023 Annual Report and appoints Helmut Berger and Märt Loite to the Board of Auditors for non-renewable three-year mandates.

ESM contributes to dialogue on confronting environmental risks at two days of Annual Plenary Meetings of the Network of Central Banks and Supervisors for Greening the Financial System held in London.

ESM participates in five-day European Evaluation Society's biennial evaluation conference in Rimini, Italy, alongside European Union and public institutions and financial sector companies.

ESM organises  9th High-level Regional Financing Arrangements Dialogue during the International Monetary Fund and World Bank Annual Meetings in Washington DC.

ESM hosts artificial intelligence conference, enriched by insights from both public and private sector experts, to better understand the technology and its impact on European economies, investments, and organisations.

ESM takes part over five days in 2024 United Nations Climate Change Conference in Baku, Azerbaijan, with the Managing Director discussing multilateral finance’s role in climate action at a panel sponsored by the Luxembourg Ministry of Finance.

ESM hosts 7th annual meeting of the Central Bank Research Association's International Finance and Macroeconomic programme on the role of central banks and international financial institutions in the green transition, organised in partnership with the University of Luxembourg and the Luxembourg Central Bank.

ESM organises two-day conference on the benefits of European strategic autonomy in Luxembourg, inviting speakers from peer institutions and academia to discuss the policy mix needed to effectively address Europe's long-term structural challenges and mitigate debt sustainability risks.

ESM and EFSF Boards of Directors waive Greece's obligation to repay ESM/EFSF loans in proportion of an early repayment to Greek Loan Facility lenders, approve the use of €5 billion from a cash buffer built up from ESM-disbursed funds for prepayment, and consent to merger of the Hellenic Financial Stability Fund with state-owned holding company Hellenic Corporation of Assets and Participations.

As part of a joint project with the European University Institute, ESM hosts two days of executive training for staff and communication experts from peer institutions on public crisis communication to bolster preparedness.

Bundesbank President Joachim Nagel delivers speech   on monetary policy in times of uncertainty at event co-organised by ESM and Luxembourg-Frankfurt Financial Professionals’ Network at ESM premises in Luxembourg.

Ireland (EFSF)

Ireland

Irish GDP expanded in 2024, due to a better-than-expected performance of foreign-owned multinational enterprises. Fiscal policy recorded a large budget surplus, driven by windfall revenues from corporation income tax and one-offs. Irish banks’ financial conditions remained sound, reinforced by strong profitability over the course of the year.

08/12/2013
Programme exit date
20.8 years
Final weighted average maturity
€17.7 billion
Total amount disbursed
€17.7 billion
Outstanding loan amount
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Greece (EFSF and ESM)

Greece

Greece’s economy performed favourably against a challenging external backdrop. Growth was solid, unemployment and public debt declined further, and the primary balance achieved a substantial surplus. The spread on Greece’s sovereign debt fell to its lowest level since the global financial crisis, and all major rating agencies assigned an investment grade rating to Greece. However, inflation remained above 2% and the current account deficit increased modestly. Renewing reform momentum is critical to overcome long-standing obstacles to growth.

30/06/2015 (EFSF) 20/08/2018 (ESM)
Programme exit date
42.5 years (EFSF) 32.4 years (ESM)
Final weighted average maturity
€203.8 billion (EFSF and ESM)
Total amount disbursed
€187.2 billion
Outstanding loan amount
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Spain (ESM)

Spain

The Spanish economy maintained robust momentum, propelled by strong consumption, a resilient labour market, and solid contributions from tourism and exports of non-tourism services. Strong nominal growth bolstered public finances. Sovereign market conditions remained favourable, with spreads narrowing by the end of 2024. Banking sector profitability improved amid favourable market conditions. The short-term outlook remains positive, but structural constraints such as low productivity could pose risks for medium-term debt sustainability, underscoring the need for continued reforms to ensure sustainable growth.

31/12/2013
Programme exit date
12.5 years
Final weighted average maturity
€41.3 billion
Total amount disbursed
€11.9 billion
Outstanding loan amount
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Cyprus (ESM)

Cyprus

Cyprus’ economy remained robust and continued to grow in 2024. Healthy revenues and moderate spending led to the highest primary surplus in the euro area, further reducing public debt. For the first time since 2013, all major rating agencies assigned an investment grade rating to Cyprus. The banking sector extended its strong performance from 2023 into 2024, maintaining record profitability. Still, reducing legacy NPLs remains a challenge. The economy would benefit from fresh reform momentum, including in the green and digital transition supported by the implementation of the recovery and resilience plan.

31/03/2016
Programme exit date
14.9 years
Final weighted average maturity
€6.3 billion
Total amount disbursed
€6.3 billion
Outstanding loan amount
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Portugal (EFSF)

Portugal

Portugal’s economy again surpassed the euro area average in 2024, despite a slight moderation in growth. The general government budget maintained a surplus, bolstered by robust corporate tax collection, while public debt as a share of GDP continued to decline from 97.7% in 2023 to 94.9% in 2024. Market access remained favourable. Portuguese banks registered record profitability and good quality loan books. Public debt is on a strong downward trend, but still high, while low productivity and an ageing population loom as structural challenges to debt sustainability in the medium to long term. It is essential to carry out the recovery and resilience plan and key structural reforms in a timely manner, while maintaining prudent fiscal policies.

18/05/2014
Programme exit date
20.8 years
Final weighted average maturity
€26 billion
Total amount disbursed
€24 billion
Outstanding loan amount
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