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Brussels supports end to Greek deficit procedure

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Brussels supports end to Greek deficit procedure

Pierre Moscovici - Photo EC

(BRUSSELS) - The EU Commission recommended Wednesday that the Council close the Excessive Deficit Procedure for Greece, hailing it as a positive signal of financial stability and economic recovery in the country.

This follows years of austerity and suffering by Greece and its people in efforts to consolidate the country's public finances, coupled with progress made in implementing the European Stability Mechanism (ESM) support programme for Greece.

"This is a very symbolic moment for Greece," said Commissioner for Economic and Financial Affairs Pierre Moscovici."After so many years of sacrifices by the Greek people, the country is finally reaping the benefits of its efforts."

The move follows payment Monday of EUR 7.7 billion as a result of the conclusion of the EU's second review, and the EU executive's proposal is seen as recognition of the massive reduction of Greece's fiscal deficit, to below the euro area average.

"Greece is now ready to exit the Excessive Deficit Procedure, turn the page on austerity and open a new chapter of growth, investment and employment," Mr Moscovici added.

If the Council follows the Commission's recommendation, only three Member States would remain under the corrective arm of the Stability and Growth Pact (France, Spain and the United Kingdom), down from 24 countries during the financial crisis in 2011.

Greece has been subject to the corrective arm of the Stability and Growth Pact since 200, with deadlines to correct its excessive deficit being extended several times.

The country has made significant progress in returning to a path of fiscal sustainability. The general government balance has improved from a deficit of 15.1% in 2009 to a surplus of 0.7% in 2016. This is well below the 3% threshold set out in the Treaty on the Functioning of the European Union. This is in addition to the substantial and wide-ranging structural reform packages that Greece has adopted as part of its commitments under the ESM stability support programme.

According to the Commission Spring 2017 Economic Forecast, the positive fiscal performance of Greece is durable. The fiscal measures undertaken in the context of the stability support programme to date are projected to yield savings of 4.5% of GDP up to 2018. The measures agreed under the first and second reviews, which already offset the budgetary implications of the roll-out of the Social Solidarity Income scheme, will continue to make a positive impact on the process of fiscal consolidation even beyond 2018, as effects accumulate. As a result of these efforts, the deficit is now projected to remain below the 3% threshold set out in the Treaty over the Commission's forecast horizon.

The necessary conditions to recommend a closure of the EDP for Greece have, therefore, been fully met, says the Commission.

Significant fiscal improvement

Further Information

Recommendation for a Council decision abrogating Excessive Deficit Procedure for Greece

Situation under the Macroeconomic Imbalances Procedure and the Stability and Growth Pact

Stability and Growth Pact

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