Greece has the potential to grow again if it sticks to the terms of its new bailout program, even as near- term forecasts that predict recession, European Commission Vice President Valdis Dombrovskis said.
“The underlying growth potential is still there,” Dombrovskis said in prepared remarks for a speech to be delivered on Monday at Humboldt University in Berlin.
“If the reforms agreed in the new ESM program are properly implemented, Greece can grow again quite quickly,” he said, referring to Greece’s 86 billion-euro ($97 billion) bailout through the European Stability Mechanism.
Greece needs to follow through with its aid commitments to return to financial stability, said Dombrovskis, whose portfolio includes the 19-nation euro bloc. He said the currency zone also needs to act as a whole to reduce its long-term debt burden and shore up the euro’s foundations.
“Sooner or later we will need to consider a treaty change,” Dombrovskis said.
Governments, legislators and financial markets will need to support the euro’s evolution alongside the European institutions. “Any attempts to steer and control the European economy fully through central institutions in Brussels will fail,” he said.
Dombrovskis called for more risk-sharing accompanied by stronger rules with national discretion. He also said developing the common currency “must not open up new rifts” with European Union nations that don’t use the euro.