European Commission says enhance surveillance on Greek debt could end by August

European Commission Valdis Dombrovskis

The executive vice-president of the European Commission, Valdis Dombrovskis, in a joint press conference with Finance Minister Christos Staikouras on Friday, signalled that Greece may transit out of a regime of enhanced surveillance in August.

He explained that there must first be a smooth completion of the 14th enhanced surveillance report, while noting that this appears to be on the right track. The decision to end enhanced surveillance and disburse the final 750-million-euro tranche of debt relief, which has been pending since 2019, will be formally taken in June, while the disbursement is expected to be paid by the end of the year.

On his part, Staikouras said that Greece, with the early repayment of IMF loans, took another step forward despite the current difficulties. He noted that the country also received the first funds from the Recovery and Resilience Fund (RRF) on Friday, which it can use to mobilise investment, support small and medium-sized enterprises and strengthen the economy towards a more open model.

Staikouras reiterated that the Greek economy had shown resilience during the pandemic and had measurable results, which were acknowledged internationally. However, he added, the crisis was undermining these results, with even worse news announced on Friday on the prices front.

He noted that no member-state was able to deal with the crisis on its own, as coordinated action was needed to address both the crisis itself and its repercussions.

Asked whether Greece must achieve a primary surplus of 2.2% of GDP by 2023, the Commission Vice-President replied that this was an ongoing debate, in which the new landscape would be taken into account.

He added, however, that it remains important for Greece to present a credible strategy to reduce deficits and debt, although he noted that the new situation caused by the war in Ukraine will be examined.

Regarding a possible extension of the general escape clause in 2023, Dobrovskis reiterated that the current decisions provide for its maintenance only for 2022, but the situation will be reassessed after the release of the Commission's latest forecasts on May 16, while the minister reiterated the Greek proposal to exclude expenditures for defence from the deficits, or at least for amounts that are above the European average not to count toward the debt or the deficit.

READ MORE: Bank of Greece slashes its estimates for economic growth in 2022.