28th May 2022

European Commission to back Greek deficit-cutting plan

The European Commission is set to back Greek government plans to rein in public spending when the full college of 27 commissioners meets this Wednesday (3 February).

In comments made to Reuters on Monday morning, and subsequently confirmed at a new conference in Brussels, EU economic and monetary affairs commissioner Joaquin Almunia said the Greek spending cuts are achievable but are also surrounded by risks.

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  • The Greek government plans to sharply cut back public spending this year (Photo: BOSSoNe0013)

"What we are saying to the Greek authorities is: your stability programme has established ambitious targets and objectives and we fully endorse these ambitious objectives," Mr Almunia told the news agency.

"We consider that the achievement of these objectives in the coming three years, before the end of 2012, is absolutely necessary. These objectives are achievable but they are surrounded by risks," he added.

Last month, Greece's centre-lef Pasok administration submitted a plan to the commission outlining the measures it intends to take in order to bring the country's deficit below three percent by the 2012.

The three percent threshold is a cornerstone under the EU's Stability and Growth Pact - a set of macro-economic rules that also limit national debt levels to 60 percent of GDP.

Greece's deficit reached 12.7 percent last year, but the barrier was also exceeded by 19 other member states as stimulus spending, rising unemployment payments and falling tax receipts took their toll on national coffers.

As part of Wednesday's communiqué, the commission will also outline a tougher monitoring programme and a list of corrective measures in case Greece fails to meet its programme of budget cuts.

"We will not accept slippages on the path to the targets," said Mr Almunia. "Every time we see slippages, because some risks materialise, we will ask for additional measures to correct these slippages."

EU finance ministers are set to adopt the commission recommendations at their regular monthly meeting on the 15-16 February. Greece will subsequently have to submit its first report on the implementation of the steps by 16 March, and at three-month intervals thereafter.

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