Greece to exit deficit pro­ce­dure

Com­mis­sion rec­om­men­da­tion has lit­tle prac­ti­cal use but sends a sig­nal to mar­kets ahead of the bond is­sue

Kathimerini English - - Focus - BY ELENI VARVITSIOTIS

BRUS­SELS – After eight years, Greece emerged yes­ter­day from the Euro­pean Com­mis­sion’s process for coun­tries with ex­ces­sive deficit.

The Com­mis­sion pro­posed Greece’s exit from the process as its gen­eral gov­ern­ment debt has dropped be­low the thresh­old of 3 per­cent of gross do­mes­tic prod­uct. This is a largely sym­bolic move, but it does have some sig­nif­i­cance given that the gov­ern­ment is plan­ning to re­turn to the bond mar­kets for the first time since 2014.

Eco­nomic Af­fairs Com­mis­sioner Pierre Moscovici gave a wink to the mar­kets yes­ter­day, say­ing that the dis­burse­ment of the tranche of 7.7 bil­lion eu­ros on Mon­day and the de­ci­sion on the deficit is “good news that the mar­kets ought to read,” even though he ex­plained that what the in­vestors do is not up to him.

Com­mis­sion Vice Pres­i­dent Valdis Dom­brovskis called on Greece to cap­i­tal­ize on its achieve­ments and con­tinue to strengthen con­fi­dence in its econ­omy, which is cru­cial as the coun­try pre­pares its re­turn to the credit mar­kets.

The Com­mis­sion’s pro­posal for Greece’s emer­gence from the deficit pro­ce­dure has to be rat­i­fied by the EU’s fi­nance min­is­ters, but has lit­tle prac­ti­cal use. Ul­ti­mately, Greece’s fis­cal tar­gets are dic­tated by the bailout agree­ment and not by the rules that ap­ply to other eu­ro­zone mem­bers. As one Euro­pean of­fi­cial told Kathimerini, “noth­ing changes es­sen­tially, the fis­cal tar­gets Greece must hit re­main high and [yes­ter­day’s] de­ci­sion is only of a sym­bolic di­men­sion.”

If Greece does emerge from the ex­ces­sive deficit process, just three EU mem­ber-states will still be in it (Spain, France and the UK), down from 24 in 2011.

Kathimerini asked Moscovici 843.22 1.1449 whether the Greek emer­gence from the process is a suc­cess that should be at­trib­uted to the pre­vi­ous gov­ern­ment, led by An­to­nis Sa­ma­ras, as Greece would have ex­ited the process from 2015 had it not been for the dis­as­trous first half of that year. The Com­mis­sioner re­sponded that after July 2015, “the ef­fort be­came more ef­fi­cient than ever, but we should not ig­nore the ef­forts by pre­vi­ous gov­ern­ments. It is the Greek peo­ple we should thank.”

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