Greek programme’s second review must conclude quickly.Faced with enormous difficulties, and after seven years of severe recession, the reform programme agreed between the Greek government and the EU institutions – along with the efforts of the Greek people – has been gradually producing concrete positive results.
In 2016 the Greek economy achieved a slightly positive growth, and is significantly over-performing with respect to the targets. The primary surplus is expected to be around 2% for 2016, more than 0.5% surplus target set in the programme, and considerably better than the 0.5% deficit projected by the staff at the International Monetary Fund (IMF). Furthermore, unemployment has been reduced to 23% from 27% in early 2015, while international organisations are forecasting positive and robust annual growth rates in terms of GDP for the period 2017-2020.
It is now the time for all interested parties to enhance their efforts and to go one step further. The Greek government should continue its reforms and speed up their implementation. At the same time, Greece’s international partners and creditors should honour their commitments under the agreement reached at the Eurogroup of May 2016 and should not require additional measures which are outside the framework of the EU acquis.
Any request to legislate in advance measures worth 2% of GDP would be unreasonable. Such conditions would be clearly unacceptable for any Member State.
A contingency mechanism to safeguard the agreed targets after 2018 could be a possible tool, and effective labour market reform in line with EU best practice is an essential element of a sound economy. However, any request to legislate in advance measures worth 2% of GDP for the 2019 budget, or to substantially cancel the effective exercise of the right to collective bargaining by not accepting the extension principle for contracts, even with a sound verification process, would be unreasonable. Such conditions would be clearly unacceptable for any Member State.
In this context, striking differences among the EU institutions and the IMF regarding debt sustainability create further obstacles for the way ahead and risk causing critical delays for the conclusion of the second review of the programme. The recent IMF Article IV staff report on Greece not only underlines these differences, but also indicates that different approaches exist even within the IMF. Reading the document, it is surprising how a respected institution like the IMF seems deliberately not to take into account real data in its primary surplus and growth projections, which have been incomprehensibly downgraded – despite the fact that results have been better than expected.
There is no room for further delays
It is essential now that the second review is concluded quickly in order for the European Central Bank (ECB) to assess properly Greece’s progress, and to evaluate its access to ECB programmes. Debt relief measures have to be discussed in the framework of the roadmap agreed in May 2016, recognising that a primary surplus of 3.5% can be sustainable only for a very limited period of time. If all parties can proceed on that basis, a successful conclusion of the Greek third programme by August 2018 would be put on a solid track. There is no room for further delays, especially given the upcoming elections in several EU member states, which would likely make it much harder to reach agreements. That is why the Eurogroup of 20 February is critical in order to find a way forward.
The European Parliament has been following the Greek programme very closely within its Financial Assistance Working Group, and has clearly recognised the significant progress that Greece has achieved as well as pointing out the need for an agreement and the necessity for Greece to further consolidate economic recovery and political stability. Any further delay will cause deeper tremors in both Greece and the Eurozone and will damage the credibility of the EU and trust in the European institutions.
At a time when Europe is facing enormous internal and external challenges, and populist and extreme-right forces are questioning the very essence of our democratic and social principles and values, we all have to safeguard the European project and enhance Europe’s sound economic development as well as its economic and regional convergence and cohesion.
By Roberto Gualtieri
Chairman of the Committee on Economic and Monetary Affairs of the European Parliament