Greece’s fourth post-bailout assessment by the European Commission, which was published Wednesday, is seen as paving the way for the disbursement of 767 million euros in eurozone central banks’ profits from Greek bond holdings (SMPs and ANFAs).
Although that decision will be made at next month’s Eurogroup meeting, the report says that Greece “has taken the necessary actions to achieve its specific reform commitments for mid-2019.” While issuing some warnings regarding certain domains, the Commission says that the conservative government has committed to making the necessary moves.
“Further actions will be crucial to complete, and where necessary accelerate, reforms. This assessment takes into account the efforts of the new administration over the last months to implement the commitments, in the context of advancing a broader reform agenda, and its willingness to prepare them in close cooperation with the institutions,” the report says.
The Commission projects that the primary surplus target will be attained both this year and next (reaching 3.8 percent and 3.5 percent of gross domestic product respectively) while pointing out that “the key reforms adopted to date by the Greek authorities and their overall growth-friendly rhetoric have enjoyed a positive response from the markets.”
Brussels calls for the maintenance of the reform momentum so that the prospects of the country remain positive. It also views as positive the tax cuts introduced by the government.
“The expansionary package is projected to have a positive impact on the economy through increased investments, which in turn are likely to boost productivity, employment and wages, and consequently stimulate private consumption as well,” the report says.
The report recognizes that the economic recovery continued in the first half of 2019 and is expected to withstand the external negative factors, despite its weak start to the year. For the whole of 2019, growth is projected to come to 1.8 percent, rising to 2.3 percent in 2020, almost twice the eurozone average of 1.2 percent.
Regarding the labor market, Brussels foresees a reduction of the jobless rate from 19.3 percent in 2018 to 17 percent this year and 15 percent in 2020, while projecting that inflation will remain anemic.
The Commission is also very positive on the privatizations front, noting that “the authorities have greatly strengthened momentum in the privatization process,” and records progress on Elliniko, Alimos Marina, Hellenic Petroleum, Athens Airport and the regional airports, Public Gas Corporation (DEPA) and Egnatia Odos, but adds that there are certain obstacles that should be overcome.