BUSINESS

Brussels outlines post-bailout plan

ELENI VARVITSIOTIS

European Commission Vice President Valdis Dombrovskis.

TAGS: Finance

The European Commission ratified on Wednesday last month’s Eurogroup decision on Greece’s post-bailout framework, approving the activation of the enhanced surveillance to begin from August 21. Its aim – as opposed to a “clean exit” – is to secure the implementation of reforms from the third program and ensure that Athens sticks to the pledges it has made.

Commission Vice President Valdis Dombrovskis said this framework provides for quarterly reviews by the creditors, with the Commission issuing assessment reports every three months and sending them to the European and the Greek parliaments and the Eurogroup. The activation of the measures to ease Greece’s debt will depend on the implementation of specific measures and the positive reports that Brussels will draft.

As Dombrovskis and Economic Affairs Commissioner Pierre Moscovici explained, the option of increased monitoring was chosen due to the extended crisis Greece has been facing, the country’s increased debt, and the need for the continuation of structural reforms that will lead to a sustainable economic recovery. This means Greece is the only country that will fail to emerge from its program with a “clean exit.”

For all his kind words on Greece’s progress, Dombrovskis issued a warning about several worrying elements, such as the high level of nonperforming loans, the relatively low competitiveness, the business environment, which needs to be improved, and the high number of reforms that have not yet been completed.

The Latvian official also explained that “it is important for Greece to remain committed to a healthy fiscal policy,” clarifying that as the economy grows and Greece achieves higher primary budget surpluses than those required, the government could use this fiscal scope to reduce taxes or for another social policy.

When Moscovici was asked whether he was aware of the Greek authorities’ decision to extended the value-added tax reduction on five Eastern Aegean islands, he claimed the decision had been communicated to the Commission in time.

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