Greece's exit from the EU's excessive deficit procedure paves way for possible return to bond markets
The European Commision has approved Greece’s exit from the excessive deficit procedure. This is due to government debt dropping below the EU threshold of 3% of gross domestic product (GDP), a figure all EU member states are obliged to adhere to. It is also somewhat of an eye-opener that the three remaining EU member states still in the excessive deficit procedure are Spain, France and the UK.
Economic Affairs Commisioner Pierre Moscovici hailed the announcement as positive and urged the markets to react to the progress made. Asked by a reporter for the Kathimerini whether the recent development is down to the previous government rather than the current one, Mr. Moscovici gave a diplomatic response by saying: “the effort became more efficient than ever (after July 2015), but we should not ignore the efforts by previous governments. It is the Greek people we should thank.”
Commission Vice President Valdis Dombrovskis has urged Greece to capitalise on its on the latest improvement by continuing to strengthen its economy, which is crucial as the country prepares its return to the credit markets. Tourism, always one of the country’s strongest and most reliable sectors, is expected to grow further this year as the summer season progresses.
However, in a note of caution, one EU official stressed that nothing changes in terms of the bailout agreement: “nothing changes essentially, the fiscal targets Greece must hit remain high and [yesterday’s] decision is only of a symbolic dimension,” he said.