BUSINESS

Brussels warns third review is crucial

ELENI VARVITSIOTIS

TAGS: Finance

BRUSSELS – In a report released on Monday, the European Commission detailed Greece’s progress in the first two years of the country’s third three-year bailout program in the way of fiscal, banking, business environment, justice and public administration reforms. It warned, however, that it is the implementation of the pending reforms that will determine the overall success of the program.

According to the 187-page report, despite the Greek economy’s considerable stamina, real gross domestic product only started recovering in mid-2016 and “this recovery remains fragile and depends to a great extent on the progress of program reviews.”

Brussels attaches great significance to the completion of the third review, noting that while it projects the economy will expand by 2.5 percent in 2018, driven by private consumption and investments, growth is inextricably linked to the completion of the review, as “the destructive results the delays in the completion of the second review had on confidence in the Greek economy were obvious.”

The report further recorded that market conditions are on the mend, employment grew by 1 percent in the first half of this year and the jobless rate dropped to 21 percent in July, while also pointing out that the unemployment rate remains particularly high, especially among young people.

The Commission is calling for more of an effort to tackle bad loans, as well as an end to “the structural problems that lead to the accumulation of new expired debts.”

The report offers a detailed account of the various reforms implemented in tax collection, in the social security system, in the credit sector (with the successful recapitalization in late 2015), in the energy market, in privatizations and toward the separation of the civil service from political parties.

It also notes that “a new set of labor market reforms have been agreed,” including the alignment of the collective redundancies framework with common European practices, and measures to strengthen the country’s judicial procedures related to industrial action as well as the modernization of union legislation, along with the maintenance of the existing framework on collective labor bargaining (with the principles of extension and favoritism remaining suspended).

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