EU spring report holds key for end to Greek fiscal supervision

BRUSSELS – The European Commission’s spring report of economic forecasts, to be issued on May 7, will be key to Greece’s exit from the regime of fiscal supervision under which it has been for the last two years for running excessive budget deficits. The report will carry an opinion on whether Greece’s efforts to bring its public deficit to below the prescribed cap of 3 percent of gross domestic product (GDP) have been successful for a second straight year. The government has said the deficit fell to 2.6 percent last year. EU Economic and Monetary Affairs Commissioner Joaquin Almunia explained late on Monday that Brussels aims to officially lift the excessive deficit procedure within the first half of the year. For this to happen, the Commission will have to be convinced that the deficit did not exceed the 3 percent cap, and that the Greek government’s target of further limiting the deficit to 2.4 percent this year is fully realistic. If the Commission deems it needs more time and fuller data, then its recommendation for lifting the regime of supervision will be sent to the Council of Ministers for approval. Meanwhile, the EU Economy and Finance Ministers Council (Ecofin) yesterday gave, as expected, the green light to Greece’s revised Stability and Growth Program for 2007-2009, which the Commission had endorsed on February 13. Ecofin’s most important point probably was that Greece has to continue its intensive efforts to reduce the deficit, with a view to bringing it down to zero in the medium term. This would require a commitment by the Greek government to trim the primary budget deficit by 0.5 percent annually. For his part, Economy and Finance Minister Giorgos Alogoskoufis pointed out that «many cast doubt on the present government’s reform program when it started being implemented about two-and-a-half years ago.» He added that Athens was now orienting itself toward the creation of a «poverty fund,» which will be designed to help those with incomes below 60 percent of the national median. The fund will have an annual budget of 2 billion euros.