Dombrovskis says it is too early to talk about a ‘clean exit’


European Commission Vice President Valdis Dombrovskis has told Kathimerini in an exclusive interview that a successful conclusion to the third review of Greece’s third international bailout by the end of the year would send money markets a convincing message that the program is on track and close to its end – although it’s still rather early to discuss a “clean exit” he said.

Do you think it’s plausible that the third review can be completed by the end of this year, when past reviews with this government have taken about a year to wrap up? Also, why is it so important that this review is finished before the end of the year?

Preparations for the third review are already under way. As you know, there are some 95 prior actions to be completed and many of these concern the implementation of measures already legislated, and indeed the ideal timeframe to finish the third review is before the year is over. Of course, as we’ve always emphasized, it’s substance over deadlines. So what ultimately matters is the progress of the implementation and adaptation of the necessary measures. If this succeeds, it would send a positive signal that the Greek program is on track and that after the third review we can start concentrating on the closure of the program and the return of Greece to financial markets.

What are the implications for the Greek economy if the review is not completed by the end of the year?

Well, first of all we’re working now and trying to ensure that the review is closed by the end of this year, but what will determine it really is progress on the Greek side with implementation of necessary measures. In any case, it’s also in Greece’s interest to demonstrate that the program is on track because if the signal is sent, it also makes more convincing the preparation for the end of the program and for Greece returning to market financing.

Greek Finance Minister Euclid Tsakalotos said during the Eurogroup press conference that his aim is to have a clean exit after the program and no post-program arrangement. Is that your view and what do you think would be best for the Greek economy?

I would say it is a bit early to have this discussion. We still have the third review to go and that’s what we are concentrating on right now. Only afterwards would we discuss that.

There has been conflict between the Greek government and the Eldorado mining company over rights to operate in northern Greece. At the same time, development of the old Athens airport at Eliniko seems to have stalled. How closely do you follow the progress of privatizations in Greece and how important is it to have the privatizations move forward as soon as possible?

Regarding the program measures, there are a number of things we are following and one of them is privatizations. But first, of course, I would emphasize the preparation of next year’s budget, ensuring that the primary surplus reaches 3.5 percent of GDP. It’s also a follow-up on social reforms, including the role of the guaranteed minimum income scheme, it’s labor market reforms, it’s efficiency of public administration. So there are many topics which we are following and privatizations is just one of those topics. Regarding the Eldorado case, we do not comment on specific companies, but what we are emphasizing to the Greek authorities is that to ensure economic recovery, it’s also important to work on business environment, on a favorable and predictable business environment to attract more investment in Greece, both foreign and local.

Do you think it was a mistake by the troika – including the European Commission – to raise the income tax and taxation in general, and do you think this high taxation is counterproductive?

Well first of all, it’s worth emphasizing that we had quite extensive discussions with Greek authorities on the composition of the measures – how much should be tax increases, how much there should be in expenditure measures – and actually it was a preference of the government to emphasize quite substantial increases in taxes. In any case, what we acknowledged during discussions is that Greece must have room to maneuver on measures and to assess the effectiveness of those measures.