Thursday

15th Nov 2018

Opinion

A positive agreement for Greece

  • Greek finance minister Euclid Tsakalotos (c) with his German and French counterpart Wolfgang Schaeuble and Bruno Le Maire and EU finance commissioner Pierre Moscovici at Thursday's Eurogroup. (Photo: Council of the EU)

On 15 June, Greece’s creditors, Eurogroup, acknowledged the achievements of the Greek government on the implementation and outcome of fiscal policy measures.

The release of the next bailout tranche was agreed; more clarity was provided on the debt relief roadmap as well as next steps towards boosting growth.

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These developments have delivered a positive signal to the markets and the Greek people, indicating that the Greek economy is steadily exiting the final stages of a longstanding and harrowing financial crisis.

For the first time since 2010, Greece’s creditors have pledged to prioritize a growth-oriented model that entails the participation of the European Investment Bank in medium- and large-scale investment projects, as well as the creation of a Greek Development Bank – a proposal that the Greek government has made since 2015.

The reluctance of the German finance minister, Wolfgang Schaeuble, to accelerate the conclusion of the bailout review was significantly addressed after the Greek government, the European Commission, the French government and the progressive forces in the European institutions pressured the Eurogroup to agree to Greece’s bailout review.

The French played a mediating role for the need to develop growth policies, so that the Greek economy can start warming its engines.

The IMF’s stance was also very productive. It pushed for further clarification of mid-term debt relief measures and the lowering of primary surpluses of around 2 percent for the post-2018 period, admitting that the Greek government has delivered its part of the deal, and pointing out that it is time for the creditors to do their part to emphasize growth policies and debt restructuring.

Turning the page

The outcome of the last Eurogroup leaves a positive footprint, setting the basis for the Greek economy to exit the vicious circle of austerity and debt.

Furthermore, the Greek government now has more time to focus on improving macroeconomic indicators, such as unemployment, and advance its reform agenda on major policy areas, such as education, healthcare, public administration, social cohesion, the re-institution of labour rights and normalisation of the labour market.

To that end, the Greek government, since 2016, has already returned to growth. It can use part of its primary surplus to finance actions that will further support vulnerable social groups and re-balance the fiscal policy mix.

Since the summer of 2015, the efforts of the Greek government and society have yielded results. The positive step that has been made in the Eurogroup necessitates prudence and hard work. The foundations for Greece to “turn the page” and overcome an unprecedented social and economic downfall have been created.

Dimitris Papadimoulis is a vice president of the European Parliament and head of the Syriza party delegation.

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