The European Commission has paved the way for Greece to benefit from new debt relief measures amounting to 748 million euros ($ 912 million), saying the country has met all the requirements.
“Greece has taken the necessary measures to meet its specific commitments, despite the difficult circumstances caused by the pandemic,” the Commission said on Wednesday in its 10th report for Greece in the context of enhanced surveillance.
European authorities have also called on Greece to build on its momentum and redouble its efforts to address implementation delays caused in part by the pandemic, mainly in financial sector reforms.
Greece is struggling to weather a nearly 25% drop in output during its decade-long debt crisis, made worse by a further 8.2% drop last year due to the pandemic.
The government of Kyriakos Mitsotakis is banking on funds from the European Union which are expected to flow over the next six years. Greece to receive up to € 32 billion from EU Recovery and resiliency facility.
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The “implementation by Greece of the reforms and investments presented in the recovery and resilience plan should provide additional growth impetus and impetus to efforts to modernize the economy”, the Commission said.
Main points of the report:
- The pace of the near-term recovery is expected to be a bit slower than expected, due to the extended containment measures. But the launch of the implementation of the Recovery and Resilience Plan is expected to stimulate growth in the future.
- Despite the progress of the vaccination campaign, the evolution of the pandemic both nationally and internationally remains a cause of uncertainty, with repercussions on tourism and tourism-related sectors.
- There is also uncertainty about the speed of recovery in the corporate and banking sectors following the phasing out of support measures, which could put pressure on liquidity and possibly corporate solvency.
- On the bright side, savings accumulated during the pandemic could boost spending.
- Fiscal policy will remain accommodative in 2021, and most fiscal measures adopted to ease the social and economic costs of the crisis are expected to be phased out in 2022.
- Debt sustainability analysis shows that in a baseline scenario, the debt-to-GDP ratio remains on a downward trajectory from 2021. Debt is expected to reach 169% by the end of the decade and fall below 100% of GDP by 2047 in the baseline scenario.
- Greek debt is sustainable over the medium term, the International Monetary Fund said in its report on Wednesday. The fund also called on the Greek government to find a solution with the European authorities to the low quality of the banks’ capital.
– With the help of Paul Tugwell and Eleni Chrepa