Greece gets bud­get ap­proval af­ter eight years of aus­ter­ity

The Guardian (Charlottetown) - - BUSINESS - BY PAN PY­LAS AND RAF CASERT

Af­ter eight years of toil by the Greek peo­ple, the Euro­pean Union says that Greece’s bud­get is no longer break­ing the bloc’s rules.

Wed­nes­day’s rec­om­men­da­tion from the EU Com­mis­sion to end the so-called ex­ces­sive deficit pro­ce­dure on Greece comes af­ter a sharp im­prove­ment in the coun­try’s fi­nances fol­low­ing years of spend­ing cuts and tax in­creases and a re­ces­sion that saw a quar­ter of the econ­omy wiped out and un­em­ploy­ment and poverty lev­els swell. “This is a very sym­bolic mo­ment for Greece,” said Pierre Moscovici, the EU’s top econ­omy of­fi­cial. “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.”

Greece has been un­der the spot­light since 2009 when its bud­get cri­sis first emerged in the wake of a sta­tis­tics scan­dal that showed the coun­try’s pub­lic fi­nances were in far worse shape than thought. Greece’s bud­get deficit was sud­denly re­vised up­ward to around 15 per cent of an­nual GDP, way above an EU limit of 3 per cent.

As con­fi­dence in Greece fell, the coun­try found it­self un­able to bor­row money in bond mar­kets.

By May 2010, it re­quired an in­ter­na­tional bailout to avoid go­ing bank­rupt and it’s been re­liant on res­cue funds ever since. In re­turn for the money, suc­ces­sive gov­ern­ments en­acted wave af­ter wave of aus­ter­ity mea­sures as well as eco­nomic re­forms to get the books back into shape.

In many ways, they now are. In 2016, for ex­am­ple, Greece posted a sur­plus of 0.7 per cent.

If the Com­mis­sion’s rec­om­men­da­tion is cleared by mem­ber states, then only three EU coun­tries would re­main in breach of the rules - France, Spain and Bri­tain. In 2011, when the global econ­omy was start­ing to re­cover from the post-fi­nan­cial cri­sis re­ces­sion, 24 of the EU’s then-27 mem­bers were in breach of the rules, which are more strictly ap­plied to coun­tries that use the euro cur­rency.

Greece is hop­ing to exit its bailout era next year and is plan­ning to start tap­ping bond mar­kets, pos­si­bly in the next few months.

The re­cent re­lease of 7.7 bil­lion eu­ros ($8.9 bil­lion) of bailout funds means the coun­try has enough money to pay its up­com­ing debts.

Be­ing out­side of the EU’s cor­rec­tive procedures doesn’t mean Greece can go back to its prof­li­gate ways.

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