The Commission has decided to recommend to the Council to close the Excessive Deficit Procedure (EDP) for Greece. This follows the substantial efforts in recent years made by the country to consolidate its public finances coupled with the progress made in the implementation of the European Stability Mechanism (ESM) support programme for Greece.
If the Council follows the Commission's recommendation, only three Member States would remain under the corrective arm of the Stability and Growth Pact (France, Spain and the United Kingdom), down from 24 countries during the financial crisis in 2011.
Vice-President Valdis Dombrovskis, responsible for the Euro and Social Dialogue, said: "Our recommendation to close the Excessive Deficit Procedure for Greece is another positive signal of financial stability and economic recovery in the country. I invite Greece to build on its achievements and continue to strengthen confidence in its economy, which is important for Greece to prepare its return to the financial markets. Swift implementation of agreed reforms is crucial to bring about their positive effects to the Greek society and economy. A long-term growth strategy would help ensure more and better jobs, robust growth and prosperity in the future."
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: "This is a very symbolic moment for Greece. After so many years of sacrifices by the Greek people, the country is finally reaping the benefits of its efforts. Following the payment of 7.7 billion euros on Monday as a result of the conclusion of the second review, today's proposal by the European Commission is recognition of the massive reduction of Greece's fiscal deficit, to below the euro area average. Greece is now ready to exit the Excessive Deficit Procedure, turn the page on austerity and open a new chapter of growth, investment and employment. The Commission will remain at the Greek people's side during this new phase."
Greece has made significant progress in returning to a path of fiscal sustainability. The general government balance has improved from a deficit of 15.1% in 2009 to a surplus of 0.7% in 2016. This is well below the 3% threshold set out in the Treaty on the Functioning of the European Union. This is in addition to the substantial and wide-ranging structural reform packages that Greece has adopted as part of its commitments under the ESM stability support programme.
According to the Commission Spring 2017 Economic Forecast, the positive fiscal performance of Greece is durable. The fiscal measures undertaken in the context of the stability support programme to date are projected to yield savings of 4.5% of GDP up to 2018. The measures agreed under the first and second reviews, which already offset the budgetary implications of the roll-out of the Social Solidarity Income scheme, will continue to make a positive impact on the process of fiscal consolidation even beyond 2018, as effects accumulate. As a result of these efforts, the deficit is now projected to remain below the 3% threshold set out in the Treaty over the Commission's forecast horizon.
The necessary conditions to recommend a closure of the EDP for Greece have, therefore, been fully met.
Greece has been exempted from separate reporting under the EDP as it has been subject to monitoring under its stability support programme. As for all euro area countries that have benefitted from stability support programmes, Greece will be subject to the normal EU rules of economic and fiscal governance, together with a dedicated system of post-programme surveillance, after it exits the programme.
The Stability and Growth Pact is the framework designed to coordinate fiscal policies and ensure sustainable public finances in the European Union.
Greece has been subject to the corrective arm of the Stability and Growth Pact since 2009. The deadline to correct its excessive deficit was extended several times. It was last set in August 2015 to be corrected, at the latest, by 2017.
Since 19 August 2015, following a request by Greece, financial assistance to the country has been provided from the European Stability Mechanism in the form of a three-year stability support programme. Last week, following the closure of the second review of the programme, the ESM approved disbursement of the next tranche of financial assistance to Greece.
While it will be subject to the preventive arm of the Pact from 2017, monitoring its fiscal performance will continue in the framework of the ESM programme throughout its duration. Thereafter, Greece should progress towards its medium-term budgetary objective at an appropriate pace, including respecting the expenditure benchmark, and comply with the debt criterion.
In 2015, the Commission proposed a programme to assist Greece in maximising its use of EU funds. The "Jobs and Growth Plan for Greece", which flanks the ESM stability and support programme, aims to mobilise EUR 35 billion from the EU budget by 2020. As of June 2017, almost EUR 11 billion has already been mobilised.
As of June 2017, operations approved in Greece under the Juncker Plan's European Fund for Strategic Investments represent a financing volume of over EUR 1.1 billion. This is expected to mobilise over EUR 3.3 billion in investments. This week, the Juncker Plan backed a EUR 150 million agreement to finance enhancements and expansions of mobile broadband networks in Greece.
For More Information
- Recommendation for a Council decision abrogating Excessive Deficit Procedure for Greece
- Situation under the Macroeconomic Imbalances Procedure and the Stability and Growth Pact
- The Stability and Growth Pact
- Excessive Deficit Procedures
- Eurogroup statement on Greece, 15 June 2017
- Spring 2017 Economic Forecast
- A New Start for Jobs and Growth in Greece
- Juncker Plan in Greece