BRUSSELS (Dow Jones) – The EU Commission has approved on Tuesday the plans of the Greek government to correct the excessive budget deficit and high debt. In addition, the Commission recommended that EU finance ministers to approve the plans of Greece as well. (Photo: ddp)
Athens wants to push its budget deficit, which currently stands at almost 13% of gross domestic product (GDP) by 2012 under the Maastricht ceiling of 3% of GDP.
Economic and Monetary Affairs Commissioner Joaquin Almunia spoke of an "ambitious program for the correction of fiscal imbalances and economic reform, but warned against risks. The EU could solve the Greek problem, but without the help of the International Monetary Fund (IMF), he added.
The Commission has applied in the case of Greece for the first time provided for in the Treaty opportunity for simultaneous monitoring of economic and fiscal policy: they decided an opinion on the stability program of the Greek government for the period 2010 to 2013, a recommendation for correcting the excessive deficit, a Recommendation on structural reforms and an infringement procedure for the statistical problems.
The Commission would examine the implementation of the program "very closely and regularly and do not hesitate to propose, if necessary, further steps, said Almunia. The budgets for 2011 and 2012, the Commission called on Athens to present further details in the coming months. From mid-May, the Greek government is to submit progress reports at quarterly intervals.
Simultaneously, the Commission opened infringement proceedings for "statistical problems." Athens sent for years flattering financial data. The EU Member States are contractually obligated to provide correct data is available to in order to enable the Commission to the budgetary surveillance. The Commission’s recommendations will be discussed this month in the middle of the Eurogroup and Council of Finance Ministers.
In detail, the Greek government wants to cut the current year including tax exemptions, increase the excise taxes on tobacco and alcohol as well as combating tax evasion. On the expenditure side will be saved in the public service salaries for officers and new recruits.
After transmission of the stability program in mid-January, Athens has also announced additional savings, such as higher gasoline taxes and a pension reform. The Commission is now required within one month of a concrete timetable. She also demanded revisions in the medium term "permanent nature" and a continuation of fiscal reforms as well as an adjustment to the budget framework.
The Commission recommended that EU finance ministers also call on Greece to a "comprehensive" structural reform to enhance the effectiveness of public administration, reform pensions and health care and to improve labor market and economic environment and to ensure financial stability. Thus the "inconsistency" with the economic policy guidelines should be terminated, it said.
Almunia reminded the press in mind that other countries would have serious budgetary problems the euro zone, especially Portugal and Spain. Allen was a loss of competitiveness in common, "said Commissioner of the economy. Therefore, the euro members would have to be not only better but also comprehensively monitored.
The Greek government described the approval of their savings plans by the EU Commission’s positive. "Today’s decision confirms the European Commission’s efforts and commitment of the government to implement a program to clean up the state treasury," says a statement by the Greek Ministry of Finance. It was also pointed out that Prime Minister George Papandreou on Tuesday had already made other measures to reduce the deficit in prospect. This is demonstrating the will to solve the deficit problem in the country.
Greece had come before Christmas in a severe financial crisis and it is because of the stability of the euro since early December, already subject to increased supervision of the EU. By manipulating statistics, the country has destroyed a lot of confidence in financial markets. The new debt crisis in the country rose in 2009 to 12.7% of GDP, total debt reached 300 billion with liabilities of around EUR 113% of GDP.
By Angelika Steinfort-Busch, Dow Jones Newswires;
+49 (0) 69 297 25 300, konjunktur.de @ dowjones.com
(Alcman Granitsas contributed to the article)
DJG / ang / kth / hab / sh