Considerations on COM(2017)314 - Amendment of Council Implementing Decision 2015/1411/EU on approving the macroeconomic adjustment programme of Greece - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2017)314 - Amendment of Council Implementing Decision 2015/1411/EU on approving the macroeconomic adjustment programme of Greece. |
|---|---|
| document | COM(2017)314  |
| date | June 2, 2017 |
(2) Following that agreement, Greece adopted a comprehensive policy package, to be implemented in a three-year ESM macroeconomic adjustment programme, which would span from the third quarter of 2015 to the third quarter of 2018.
(3) The comprehensive policy package, laid down in an ESM Memorandum of Understanding on Specific Economic Policy Conditionality (the Memorandum of Understanding) of 19 August 2015, aims at restoring financial market confidence, reestablishing sound macroeconomic balances and enabling the economy to return to sustainable growth. It is structured on four pillars: restoring fiscal sustainability, safeguarding financial stability, enhancing competitiveness and growth, and modernising the State and the public administration.
(4) After a first review of the Programme was completed and following the Eurogroup statement of 25 May 2016, a positive assessment by the Commission and ECB of the implementation of the Programme and the approval of the ESM, on 16 June 2016
OJ L 140, 27.5.2013, p. 1.
Council Implementing Decision (EU) 2015/1411 of 20 August 2015 approving the macroeconomic
Greece and the Commission on behalf of the ESM signed a Supplementary Memorandum of Understanding. The Supplementary Memorandum of Understanding updates the policy conditions set out in the Memorandum of Understanding to reflect the progress achieved in the implementation of the Programme.
(5) The Eurogroup on 25 May 2016 also considered the sustainability of Greek debt. It agreed on a package of debt measures to be phased in progressively, as necessary to meet the agreed benchmark on gross financing needs. It agreed that the first set of measures would be implemented in the short term, that is, after the closure of the first review and up to the end of the Programme. On 23 January 2017, the Boards of Directors of the ESM and European Financial Stability Facility adopted the rules implementing the set of short-term debt relief measures for Greece, the implementation of which has begun. The Eurogroup of 25 May 2016 also agreed that after the successful implementation of the Programme by mid-2018, the Eurogroup expected the implementation of a possible second set of measures if needed to meet the agreed debt sustainability benchmarks.
(6) On 25 May 2016 the Eurogroup welcomed the intention of the IMF management to recommend to the Fund's Executive Board to approve a financial arrangement for Greece. The Eurogroup confirmed that position on 5 December 2016 and it also stressed the need for shared conditionality, agreed between all the institutions and Greece3. On 5 December 2016 the Eurogroup also called upon the institutions and Greece to swiftly resume negotiations in order to reach a staff level agreement (as soon as possible, based on such shared conditionality and mandated the Eurogroup Working Group to assess that staff level agreement. That conditionality includes the adoption of a pre-legislated fiscal package to help ensure a primary surplus of 3,5% of GDP over the medium term.
(7) The Greek economy has shown a high degree of resilience to the environment of elevated uncertainty and the imposition of capital controls, with GDP contracting by only 0,2% in 2015. In 2016, the Greek economy stagnated, as nascent growth in private consumption was offset by a decline in public consumption and net exports. The Commission Spring 2017 forecast projects the Greek economy to grow by 2,1% and 2.5% in 2017 and 2018 respectively, on the back of improving economic sentiment supporting investment and consumption.
(8) Under that forecast, the debt-to-GDP ratio would amount to 179,0% in 2016, 178,8% in 2017, 174,6% in 2018 and 165,2% in 2019. The debt-to-GDP ratio would therefore move to a declining path as from 2017. Greece achieved primary surpluses of 0,5% of GDP in 2015 and 4,2% of GDP in 2016, outperforming its Programme targets of -0,25% and 0,5% of GDP, respectively. The Greek authorities will pursue a fiscal path premised on primary surplus targets of 1,75% of GDP in 2017 and 3,5% of GDP in 2018 and over the medium term. The trajectory of the fiscal targets is consistent with expected growth rates of the Greek economy as it recovers from its deepest recorded recession.
(9) In light of the updated forecasts of the Commission services and of the results of the second review conducted by the Commission, in liaison with the ECB and, where appropriate, with the IMF, an update should be made to the existing Programme, reflecting the reforms undertaken by the Greek authorities by the end of the first quarter of 2017. On that basis, the updated conditionality should outline the range of
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policies needed for a successful implementation of the Programme in the future, with the aim to return the Greek economy to sustainable growth. It is, therefore, appropriate to modify Council Implementing Decision (EU) 2015/1411.
(10) Any form of financial assistance received by Greece to help it implement the policies
under its Programme should be in line with the legal requirements and policies of the Union, in particular the Union’s economic governance framework and the Charter of Fundamental Rights. To the extent that any of the measures envisaged in the macroeconomic adjustment programme limit the exercise of the rights and freedoms recognised by the Charter of Fundamental Rights, those limitations are in conformity with Article 52(1) thereof. Any intervention in support of financial institutions should be carried out in accordance with the Union’s rules on competition. The Commission should ensure that any measures laid down in a Memorandum of Understanding in the context of requested ESM financial assistance is fully consistent with this Decision.