Recommendation for a Council Decision amending Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit

Measures concerning the coordination and surveillance of the budgetary discipline of Greece and the setting out economic policy guidelines for Greece are defined in Council Decision 2011/734/EU on the basis of Articles 126(9) and 136 TFEU.

Compliance with the decision is relevant not only in the context of the excessive deficit procedure, but also in the context of the financing to Greece by the euro-area Member States, through the EFSF.

The government deficit (ESA95 basis) ceiling for 2011 established by the Council Decision was missed. For 2012, the government adopted a budget aimed at sticking to the target set in the Council decision and has adopted measures which would ensure a further reduction in the deficit in subsequent years. Economic activity in 2011-2014 is currently estimated and projected to be, much weaker than previously expected when Council Decisions 2010/320/EU and 2011/734/EU were adopted.

In February 2012, the Greek government announced measures aimed at reducing the primary deficit in 2012, including the adoption of a supplementary budget. In March 2012, Greece executed a debt exchange operation which substantially reduced interest expenditure in 2012 and in next years, and contributed to the sustainability of government debt.

Given this, there is a need to revise the annual targets while keeping the deadline for the correction of the excessive deficit. Targets ex pressed in terms of the primary surplus as a percent of GDP of -1.0 in 2012, +1.8 in 2013 and +4.5 in 2014, appear appropriate given the deadline for the correction of the excessive deficit by 2014, and the need to improve the debt sustainability.

There have been intensive discussions among Greece and the Commission services, the ECB and the IMF staff, on the update of the policy conditionality in the Memorandum of Understanding of the economic adjustment programme of Greece. These discussions considered not only the fiscal consolidation measures, but also the need to enhance the growth-friendly nature of these measures and to minimise any social impact.

The Commission has adopted a Recommendation for a Council Decision amending decision 2011/734/EU and has transmitted it to the Council.

EUR-Lex: COM(2012)116: Follow the progress of this document through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2012:116:FIN

ESO: Background information: Communication from the Commission to the Council - Follow-up to the Council Decision 2011/734/EU of 12 July 2011 addressed to Greece, with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit (March 2012) http://www.europeansources.info/record/communication-from-the-commission-to-the-council-follow-up-to-the-council-decision-2011-734-eu-of-12-july-2011-addressed-to-greece-with-a-view-to-reinforcing-and-deepening-fiscal-surveillance-and-g/

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