Announcing the return of the institutions to Athens after Monday’s meeting of Eurozone finance ministers to discuss Greece, Eurogroup President Jeroen Dijsselbloem said this ushered in a new approach that emphasised reforms over austerity.
“There will be a change in the policy mix, if you will, moving away from austerity and putting more emphasis on deep reforms,” he said in a joint press conference with European Commissioner for Economic and Financial Affairs Pierre Moscovici and re-elected Managing Director of the European Stability Mechanism (ESM) Klaus Regling.
Speaking after an unusually short Eurogroup meeting on Greece, Dijsselbloem said the institutions will go back to Athens and work with Greek authorities on an additional package of structural reforms involving the tax system, pension system and labour market regulation. He further noted that such deep reforms had also been a key element for the IMF.
“We have to realise that there is no political agreement at this point, that would be too early. It’s a very positive and good step that the institutions have enough confidence and a common agreement to go back to Athens,” he added.
The Eurogroup’s president warned, however, that a lot of work remains to be done and that such a combination of reforms would be difficult in any country. The institutions and the Greek government would do that work on the ground, in more technical detail, he said, returning to the Eurogroup if and when a staff-level agreement was reached.
“Then we will have a final political discussion on the later stages of the programme and how to move forward,” he added, expressing satisfaction with the outcome of Monday’s Eurogroup.
Regarding the element of time, Dijsselbloem clarified that there was no liquidity issue in the short run “but we all feel sense of urgency because of key issue of confidence.”
“If we want economic growth in Greece to continue and to start picking up, confidence is a key factor. That confidence has been returning in the past year and needs to strengthen and we don’t want to jeopardise that, so that will be a strong motivator to do the work as soon as possible,” he said.
Moscovici: European Commission ready to support Greek efforts to boost employment
Welcoming the return of the institutions to Athens to resume work on concluding the second review, Moscovici said the Greek people need to see a “light at the end of the tunnel of austerity.”
“The further fiscal measures for the period immediately following the programme will serve to reassure all partners of Greece’s commitment to maintaining sound fiscal policy in the future,” he said, while also pointing out that there was still “some hard work ahead”.
“We still need to narrow our differences in terms of fiscal projections and we still need to agree on all details of the policy package to conclude the second review. But as I always have said, where there is a will there is a way and today we have seen clearly that the will is there,” he noted.
He emphasised that the Commission was ready to support efforts to boost employment in Greece, in particular.
“In terms of labour market measures, we will work to swiftly finalise our common understanding. We also stand ready to support Greece in its efforts to roll out active labour market policies and to explore how best to provide the necessary financing for this and the Commission is clearly committed to help the Greek authorities in that direction,” he said.
The Commissioner also highlighted the progress Greece has made in economic and budgetary terms, saying this was now recognised by all actors. Citing fiscal data and economic projections, he noted that Greece had surpassed both growth forecasts and programme targets, and that with returning confidence was projected to achieve 2.7 pct of GDP growth for this year and 3 pct next year. Projected data on budget execution also confirmed a continuation of these trends, he added.
“It is now evident that Greece has significantly overperformed its 2016 primary surplus target, it’s likely to achieve a surplus of at least 2 pct of GDP compared to the programme target of 0.5 pct. If this is confirmed by Eurostat in April, this means that Greece’s primary surplus has already surpassed ints 2017 target of 1.75 pct of GDP and is already well on the way to meet its 2018 global goal,” Moscovici pointed out.
It was now imperative to nurture and strengthen this progress and accelerate along the path to an overall agreement in order to build on this positive dynamic, he concluded.