Brussels/Athens, 28/12/2000 (Agence Europe) - Greece joined the countries of the euro area on 1 January 2001 and will therefore participate in the first meeting of the Euro Group of the new year, to be chaired by Belgian Finance Minister Didier Reynders, on 18 January in Brussels, prior to the first Ecofin Council of the year, scheduled for Friday 19 January.
As it joins the single currency, Greece is quitting the exchange-rate mechanism (the "ERM II" or "EMS2") set in place at the start of the third phase of Economic and Monetary Union on 1 January 1999 to ensure that the Member States not participating in the euro area, but participating in this mechanism, "steer their policy towards stability", and to promote convergence, thus lending support for these countries' efforts to adopt the euro. The agreement on the ERM II between the European Central Bank and central banks of Member States not belonging to the euro area has therefore been amended, to specify that the Bank of Greece is no longer a party to this agreement, with effect on 1 January 2001 (the agreement has been published in Official Journal C 362).
On 27 December, the Central Bank of Greece proceeded with its final cut in key interest rates prior to the country's entry into the single currency, so as to align rates with those in effect in the euro area. The Bank of Greece announced that, "with a view to Greek entry into the euro area on 1 January 2001", its Monetary Policy Council decided to align key rates with corresponding European Central Bank rates. It thus lowered: - the money market intervention rate from 5.75% to 4.75%; - the Lombard rate (ceiling) from 6.50% to 5.75%; - the overnight (floor) rate from 4.75% to 3.75%.
ECB announces that Greece is now a full member of the Eurosystem
"Yesterday, 1 January 2001, the euro was introduced in Greece. Greece has thus become the twelfth EU Member State to adopt the single currency and the first one to do so since the start of stage three of Economic and Monetary Union (EMU) on 1 January 1999. The European Central Bank welcomes this first enlargement of the euro area." With this press release issued on 2 January the ECB announced the entry of Greece into the euro area, observing that the Bank of Greece "is now a full member of the Eurosystem, with the same rights and obligations as the 11 national central banks of the other EU Member States that have adopted the euro". The press release adds that, in accordance with Article 49 of the Statute of the European System of Central Banks and of the European Central Bank, the Bank of Greece "today paid up the remainder of its contribution to the capital of the ECB, as well as its shares of the ECB's reserves".
Greece submitted a stability programme 2000-2004 foreseeing a budget surplus of 2% in 2004
In late December, Greek Economy and Finance Minister Yannos Papantoniou submitted, with a view to adoption of the euro, his country's "Stability and Growth Programme 2000-2004", which foresees: - a budget surplus of 0.5% in 2001 and 2% in 2004; - a reduction of the public debt from 103.9% of GDP at end 2000 to 98.9% in 2001 and 84% in 2004; - a reduction of inflation to 2.3% "around mid-2001, due to the decline of oil prices on international markets", with inflation being maintained at or near that rate subsequently; - a reduction in unemployment from 11.3% in 2000 to 7.5% in 2004. The programme is based on the assumption of a sound environment in the euro area countries, with growth of around 3% and oil prices declining, in the next four years, to an average of USD 25 per barrel.