Brussels, 09/02/2005 (Agence Europe) - As prescribed in the procedure of the Stability and Growth Pact, the Commission adopted a recommendation on Wednesday on the basis of Article 104(9) of the Treaty, which gives formal notice to Greece to correct its excessive budgetary deficit by end 2006, the spokesman's service for President Barroso announced. The step taken on Wednesday is the logical continuation of the decision taken by finance ministers during the last Ecofin Council, when they had followed the Commission by noting that, despite significant changes, Greece did still not comply with the Council recommendations adopted in July 2004 on the basis of Article 104(7) (EUROPE of 19 January, p.7). Speaking before the press, the spokesperson explained that: “given the forecasts for 2005, it is reasonable to call on Greece to correct its deficit in a balanced and sustainable manner by end 2006”.
Proceeding to an adjustment that will certainly be taken on board during work aimed at improving the way the Stability and Growth Pact works, the Commission thus grants Greece another year to come below the 3% mark set out in the Pact. This decision takes account not only of the high level of deficit (5.5% in 2004) but also of the conclusions of the finance ministers adopted in January. The efforts made by Greece are expected to be exemplary in 2005 and the Commission has therefore not demanded more measures for the current year. It keeps to its forecasts of 2005 deficit (3.6% of GDP), which are considerably higher than Greek forecasts, and recommends that Athens apply greater budgetary austerity for the current year, postponing the implementation of additional measures until 2006. The Commission, however, specifies that these additional measures should be permanent and represent at least 0.6% of GDP. Such measures will be specified in a report to be forwarded on 21 March at the latest, while a follow-up of budgetary developments will be ensured through a series of reports expected for October 2005, April 2006 and October 2006, the Commission adds. In the longer term, the Commission invites Greece to continue to reduce its deficit by 0.5% of GDP annually after 2006 and to bring the debt down at a satisfactory rate.
Finance Ministers are to examine the recommendation on Greece's excessive deficit during their next meeting in Brussels, on 17 February. On this occasion, the Ecofin Council will also assess the multi-annual programmes of the 19 Member States but will not take a stance on the latest version of Greece's stability programme (the Council has already endorsed the programmes for five Member States: see EUROPE of 3 February, p.10). Greece hopes to take into account the decision concerning the excessive deficit procedure in order to amend the document that it had submitted in 2004 so that the details of measures that it hopes to implement in 2006 to reduce deficit will appear in the updated version of its stability programme.
The spokesperson for Commissioner Almunia said it would be “logical”, given the state of public finances in Greece and the Council's decision taken in January, for the ministers to take on the Commission's formal notice on their behalf. “Our recommendation is based on the analysis made in December, to which the Council had subscribed”, Joaquin Almunia said. During the last Ecofin Council, ministers had already noted in the same terms as the Commission that the “excessive deficit situation could last until 2005” despite the resolve shown by Greece to implement the 2005 budget with the greatest rigour.
Markus Ferber calls on Ecofin Council to be firm
CSU member Markus Ferber urges the next Ecofin Council (of 17 February) to translate into reality the Commission's recommendations regarding Greece. There should not be a reoccurrence of what happened in November 2003 when the Ecofin Council had suspended the excessive deficit procedures towards France and Germany, the MEP warns, saying in a press release that finance ministers now have a chance to redeem themselves and to give back to the Stability Pact a little credibility.