22 November 2012

Statement by VP Rehn in the European Parliament - Europe stands by Greece

"Frankly, I see no reason why we should not be able to conclude the package – and do away with the uncertainty that has been holding back a return of confidence, and thus of investment and growth, in Greece."

At the beginning of this week a staff-level agreement was reached between the EU-IMF Troika and the Greek authorities on an updated set of programme conditionality. The long meeting of the Eurogroup on Tuesday night saw substantial progress towards an agreement on Greece, even if a definitive conclusion ultimately proved elusive.

Importantly, the Eurogroup recognised that the Greek authorities have successfully implemented the full set of prior actions agreed with the Troika. This is the result of a very considerable effort on their part. On the fiscal side, these include the adoption of measures totalling some €13.5 billion or 7 per cent of GDP.

In terms of structural reforms, important decisions have been taken to build a more effective and efficient tax administration. That is indeed crucial, as a fair sharing of the tax burden is a question not only of sound public finances but equally of social justice. For instance, further reforms to the pensions system have increased the statutory retirement age to 67 years, and introduced a link to life expectancy. In two years, Greece has moved from having a pension system that was clearly unsustainable, to one whose medium-to-long-term sustainability is being ensured.

On the financial sector, several actions have been completed to pave the way for the recapitalisation of banks, an essential step to restart the flow of credit to Greek households and businesses. This is crucial for Greece to return to economic growth and job creation. Moreover, in the healthcare sector, measures to control over-prescriptions and fraud mean that public expenditure will have fallen by €1 billion (or around 25 per cent) this year, and should fall by a further €800 million over the next two years.

So we should move beyond the myth that no progress has been made in Greece. That perception is damaging and unfair. Greece is delivering. Now it is time for Greece’s European and international partners to deliver their part of the bargain. To do that, the Eurogroup needs to decide on a credible set of measures to restore Greece’s debt sustainability. The discussions on Tuesday night moved us close to an agreement.

In this context, we should be clear that this set of measures does not exclude the need to reassess Greece's debt sustainability in the coming years, and to take further decisions as necessary in the light of future developments – depending of course on the full implementation of the reform programme by Greece.

I trust everyone will reconvene in Brussels on Monday with the necessary constructive spirit, and move beyond the detrimental mindset of red lines. Frankly, I see no reason why we should not be able to conclude the package – and do away with the uncertainty that has been holding back a return of confidence, and thus of investment and growth, in Greece. And thus also do away with the clouds of uncertainty over the European economy.

Press release

© European Commission