Brussels, 11/12/2009 (Agence Europe) - Transparency and determination are the most frequent words used to seek to reassure financial markets about the Greek public finance situation. “Georges Papandreou was extremely clear (…). It is a priority for the Greek government to take new measures, and he has pledged to move firmly forward to these measures”, said Fredrik Reinfeldt after the first day of work at the European Council, on Thursday 10 December.
Although the structural problems of Greece date back to before the crisis, the situation has now reached worrying proportions. In addition to the public deficit, which the Greek government hopes to reduce to 9.1% of GDP next year, the debt will rise to over 120% of GDP and unemployment is growing. Such a situation gives rating agencies cause for concern. “It is obvious that Greece is undergoing very substantial financial and budgetary problems”, José Manuel Barroso told the press. According to the president of the Commission, who sticks to the message forcefully delivered by Commissioner Almunia, the draft budget presented on 20 November is a step in the right direction but others are still necessary to put the country back on the road to improving the budgetary situation and reducing the debt. “Mr Papandreou expressed his personal resolve to face up to these problems”, Mr Barroso added, saying he was “fully confident that the Greeks would manage to do so”. The Commission is ready to help the Greek government set in place a wide-reaching programme of reform and financial restructuring, under the provisions of the treaty for the countries of the eurozone, he reiterated. While the EU can come to the assistance of member states that belong to the eurozone (through the balance of payments support mechanism), there is not in principle a bail out clause for countries that have adopted single currency. Solidarity could, where necessary, take other forms (bilateral?) although, for now, everyone refuses to envisage failure to pay on the part of Greece or Greece's withdrawal from the eurozone.
“I do not see the risk of a state default”, Jean-Claude Juncker repeated on Friday 11 December. The Luxembourg prime minister and the president of the Eurogroup said he was “fully convinced Greece will come back to the consolidation path that is dramatically needed” and that the Socialist government will take matters seriously with “effective action”. Also confident, Angela Merkel said the Greek prime minister is “strongly determined to reduce deficits”. The German chancellor nonetheless said that the EU27 had “'not spoken of the programme to support or help Greece” as “it is Greece that must shoulder its own responsibility”.
Mr Papandreou is taking on this responsibility and, on Monday, will present concrete measures to overcome the crisis and restore viability to the Greek economy, he announced after the summit. Measures to be taken, in three areas, will aim to “boost the real economy, streamline the public sector, and change to a greener and more environmentally-friendly economy”, he said. According to the prime minister, Greece's problems are not linked to the banking sector (Greek banks are doing relatively well compared to other member states, he stressed the day before when speaking to his counterparts). The real problems relate to corruption, tax evasion and bureaucracy. “We cannot welcome investment if we are not able to tackle the problem of corruption”, he said, specifying that these measures will be implemented “as quickly as possible”; He also confided that he hoped to reduce the budgetary deficit by 4 percentage points in 2010 (more than foreseen to date). “We are not here to destroy the social state” but to combat corruption, Mr Papandreou added, who said he was “fully satisfied” with the support given to Greece by its European partners and the European institutions. (A.B./A.By./H.B./transl.jl)