Greece concludes twelve years of EU fiscal oversight

By Al Mayadeen English
Source: Agencies
20 Aug 2022 22:42

Ending the oversight means that Greece will have more control over its domestic economy.

Greece concludes twelve years of EU fiscal oversight

Greece on Saturday concluded 12 years of European Union fiscal surveillance that was imposed in return for bailouts after a crushing debt crisis.

In November 2009, Athens revealed a sharp rise in its public deficit that eventually led to a financial crisis across the eurozone and wreaked havoc on Greek finances for a decade.

In exchange for bailout cash of 289 billion euros and to stop Greece from crashing out of the eurozone, a "troika", made up of the International Monetary Fund, EU, and the European Central Bank, demanded across-the-board reforms from Athens.

These included deep state spending and salary cuts, tax hikes, privatizations, and other sweeping reforms aimed at righting public finances.

The economy contracted by more than a quarter, unemployment spiked to almost 28 percent and skilled professionals emigrated in droves.

"A cycle of 12 years which brought pain to citizens, led to economic stagnation and divided society," has ended, Prime Minister Kyriakos Mitsotakis said.

"A new horizon filled with growth, unity and prosperity emerges for all," he said. "The Greece of today is a different Greece.

"We have recorded strong growth and a significant slide in unemployment of three percent since last year and 5 percent since 2019," he added.

Ending the oversight will strengthen Greece's international market position by increasing its attractiveness to investors. Athens will also now have greater control over its domestic economic policy.

"The end of enhanced surveillance for Greece also marks the symbolic conclusion of the most challenging period the euro area has experienced," Paolo Gentiloni, the European Commissioner for Economy, said in a statement.

"The sovereign debt crisis that defined the first years of the previous decade was a steep learning curve for our Union.

"Our strong collective response to the pandemic indicated that Europe had learned the lessons of that crisis. We must show the same solidarity and unity as we navigate the troubled waters our economies are now entering."

Greece -- like fellow bailed-out EU members Spain, Portugal, Cyprus, and Ireland -- will still be monitored by its creditors while paying back its debts.

In Greece's case, that will take another two generations, with the last loans due for repayment in 2070.

According to European Commission projections, the Greek economy will grow by 4 percent this year, much higher than the eurozone average of 2.6 percent.

However, Greece's unemployment rate is one of the highest in the monetary union, its minimum wage one of the lowest and the country's debt is 180 percent of gross domestic product.

The Greek economy has always lagged behind the much more developed economies of countries like Britain, Germany, France, and other advanced capitalist countries, mainly in northern Europe.

Greece has struggled to establish itself economically in the face of far more developed economies on the continent of Europe.

Greece has recently been under pressure by the EU to cut its gas consumption by 24% as part of a new guideline on coordinated gas consumption reduction across the EU to reduce the reliance on imports and cope with the price surge.

All member countries of the EU, with the exception of Hungary, agreed to cut gas supplies by 15% for this winter.

Some EU members plan to demand exemptions from the European Commission's proposal and Greece is one of them.

On July 27, the Greek Foreign Ministry announced that a total of sixteen agreements were signed between Greek and Saudi entrepreneurs.

The 16 agreements concern the sectors of energy, shipping, aquaculture, waste management, construction and defense technology, and also foods and agri-food, as well as culture.