ECONOMY

EU says Greece is ‘broadly on track’

Comments yesterday by the European Commission on the targets in Greece’s fiscal recovery schedule were positive, as the head of the European Central Bank (ECB) described the country’s budget consolidation program as being realistic. The European Union’s executive arm said Greece is «broadly on track» with budget cuts and economic reforms linked to 110 billion euros in bailout loans from EU countries and the International Monetary Fund. A report by the European Commission said Greek efforts are «positive» but it warned that there are a number of areas where Greece could still run into trouble. It said inflation is «markedly higher» than the government had expected, partly because there is little competition in the market and major suppliers are easily able to pass indirect tax increases onto customers. Government revenues have been coming in below expectations, it said, but spending has fallen below target. It also warned that these figures are not certain because there is no final data for sectors where spending can easily overrun – such as in healthcare. Meanwhile, ECB President Jean-Claude Trichet said Greece’s budget consolidation program was realistic and represented a good basis for economic recovery. «Looking ahead, the economic and financial program decided by the Greek government… represents a solid basis for a more positive outlook,» he said. «The program is based on realistic macroeconomic assumptions and, in addition to the necessary expenditure cuts and tax increases, includes a very rigorous and comprehensive structural reform agenda,» Trichet said. Over the medium term, structural reforms and a return to fiscal sustainability will help to support employment and renew growth in Greece, he said.