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Europe

European Commission approves Greek austerity plan

Text by News Wires

Latest update : 2010-02-03

The European Commission has endorsed a Greek plan to bring its spiralling budget deficit below three percent of GDP by the end of 2012, but warned it would closely monitor efforts to balance the country's finances.

AFP - The European Commission on Wednesday approved Greece's budget reform plans to reduce a massive deficit but opened an infringement procedure against Athens over its unreliable economic statistics.
   
"Greece has adopted an ambitious programme to correct its fiscal imbalances and to reform its economy ... The commission fully supports Greece in this difficult task," EU Economic and Monetary Affairs Commissioner Joaqun Almunia, said.
   
However, "considering that Greece has failed in its duty to report reliable budgetary statistics ... the Commission is also initiating infringement proceedings," the EU executive arm said in a statement.
   
The Greek prime minister late Tuesday ordered a public salary freeze, a higher retirement age and a hike in petrol prices in a desperate bid to tame a debt crisis ahead of the EU verdict.
   
Socialist leader George Papandreou urged political rivals to back his crisis budget as he launched a new bid to reassure the international finance community. The scope of Greece's debt and its 12.7 percent public deficit have shaken the euro and put pressure on Greek sovereign bonds.
   
"Yesterday's announcement strengthens the government's commitment to deliver the programme's objectives of more sustainable public finances and a more competitive economy," said Almunia.
   
"This is in the interest of the Greek people, who will benefit from better and more durable growth and job opportunities in the future, and it is in the interest of the euro area and of the EU as a whole," he added.
   
The European Commission approved Papandreou's measures to cut debt estimated at 294 billion euros (412 billion dollars) and to cut the deficit to 8.7 of gross domestic product this year.
   
Under EU rules, government deficits have to be eventually be brought below three percent to be a member of the euro zone, something Greece plans to do by 2012.
   
Almunia stressed that Greece's implementation of its plans would be rigorously monitored: "We have put in place permanent system of surveillance," he said.
   
Greece is also required to submit a first report in mid March, spelling out the implementation calendar of the measures to achieve the 2010 budgetary targets.
   
Athens must also be prepared "to adopt additional measures if needed," and will be required to submit quarterly reports from mid-May onwards on the implementation of the reforms.
 

Date created : 2010-02-03

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