On Wednesday 12 July, the European Commission proposed to end the excessive deficit procedure in place against Greece since 2009.
“This is a symbolic decision. Greece is finally reaping the rewards of its extremely tough sacrifices”, said the Commissioner for Economic and Financial Affairs, Pierre Moscovici.
The Commission's proposal is based on facts: the Greek deficit trajectory, has fallen from a level close to 16% of national GDP in 2009 to a primary budgetary surplus (not including servicing the debt). According to the Commission, this new situation is “sustainable”, as long as the Greek deficit remains well below the regulatory threshold of 3% of GDP in 2017 and 2018.
This Commission proposal comes on the eve of President Juncker's visit to Thessaloniki. Moscovici will himself travel to Athens on Tuesday 25 July, where he will meet the Greek government to discuss the exit strategy for the third Greek bailout plan up to mid-2018, and in particular a phased return to the financial markets by gradual issuances of medium- and long-term debt instruments. “The stage everyone is waiting for is the return to the markets”, the Commissioner said.
Moscovici warned: coming out of the excessive deficit procedure does not mean that no additional budgetary measures will now be required from Greece. As it is under a bailout plan, it will be the subject of special treatment.
Once Greece has come out of the excessive deficit procedure, there will only be three countries still under this budgetary infringement procedure: the United Kingdom, France and Spain. France must reduce its excessive deficit in 2017 and Spain in 2018. Moscovici described it as “absurd” to say that the European budgetary rules are not effective. (Original version in French by Mathieu Bion)