Greece Pleases EU On Money Recovery
- August 11th, 2010
- Posted by EUEditor
A European Union task force says that Greek authorities have made good progress putting into effect the recovery package agreed to in March, to deal with the financial crisis — though it has had to take note of strong resistance to the program.
A statement from the European Central Bank says that a team it dispatched to Athens, together with officers from the European Commission and the International Monetary Fund, (26/7 … 5/8/10), had completed the first quarterly review of the Greek government’s economic program — supported by a €80-billion (A$115.45-billion; dcerates.com) loan from Euro area countries and a €30-billion (A$43.3-billion) Stand-By Arrangement with the IMF.
See also EUAustralia Online, “EU Summit: In Greeks we trustâ€, 28.3.10.
Abridgment of the statement:
Our overall assessment is that the program has made a strong start. The end-June quantitative performance criteria have all been met, led by a vigorous implementation of the fiscal program, and important reforms are ahead of schedule. However, important challenges and risks remain.
The contraction in the economy is in line with May program projections: GDP is expected to decline by 4 percent in 2010 and some 2½ percent in 2011. Inflation is higher than expected – we have revised our estimate for 2010 to 4¾ percent – pushed up by indirect tax increases. With no signs of second-round effects, inflation is expected to decline rapidly.
In the fiscal area, the authorities have kept spending significantly below budget limits at the state level. This has offset slippages caused by problems in controlling expenditures at the sub-national level (local governments, hospitals, social security funds), and the overall deficit target for end-June was met…
In the financial sector, there has been a moderate deterioration in capital adequacy as non-performing loans have increased in line with expectations …
Impressive progress is being made on structural reforms. The mission welcomes Parliament’s approval of the landmark pension reform, which is far-reaching by international standards. Substantive labour market reform is also well under way …
The Greek government is still unable to access international capital markets except for placement of short-term T-bills. However, market sentiments appear now to be improving. Taking advantage of the breathing space afforded by the large-scale international financial support, the key challenge facing the Greek authorities remains to establish a strong track record of policy implementation … (ends)
Field of conflict
Many of the findings of the EU review that it puts in a positive light will be viewed with a jaundiced eye in Greece, where austerity measures are being greeted with dread, and have been bitterly opposed in street disturbances. (See also, EUAustralia: “Disturbances in Greece”, 31.7.10; “Three dead in Athens”, 6.5.10).
This is acknowledged in part in the first quarterly review:
“Restoring competitiveness and boosting potential growth remains critical to the program’s success. The challenge facing the government in this regard will be to overcome resistance from entrenched vested interests to opening-up of closed professions, deregulation, implementation of the services directive, and elimination of barriers to development of tourism and retail.â€
Two different perspectives, ideologies, mentalities.
More trouble yet?
Reference
EC, ECB and IMFÂ Statement on the first review mission to Greece, 5.8.10. http://www.ecb.int/press/pr/date/2010/html/pr100805_1.en.html, (11.8.10).