ECOFIN Council: Greece must correct government deficit by 2012
17 February 2010
The Council has set numerical limits on Greece's government deficit, requiring it to make annual changes to its consolidated gross debt in 2010, 2011 and 2012. Greece must implement a tight timetable of corrective measures, the first deadline being 15 May 2010.
The Council today:
– gave its opinion on Greece’s latest update on its stability programme, which sets out plans for reducing its government deficit below 3 per cent of gross domestic product (GDP) by 2012;
– adopted a decision giving notice to Greece to remedy its excessive deficit by 2012, setting budgetary consolidation measures according to a specific timetable, including deadlines for reporting on measures taken;
– issued a recommendation to Greece to bring its economic policies into line with the EU's broad economic policy guidelines and remove the risk of jeopardising the proper functioning of economic and monetary union, and adopted a decision to make this recommendation public. Greece has been the subject of an excessive deficit procedure since April 2009, when the Council also issued a recommendation be taken on corrective action. In December 2009, the Council stated in a decision that Greece had failed to comply with its recommendation.
Greece's government deficit for 2009 is put at 12.7 per cent of GDP – well above the 3 per cent reference value set by the EU treaty – in the Commission's autumn 2009 economic forecast and in Greece's updated stability programme. Its government debt at the end of 2009 is estimated to have been in excess of 113 per cent of GDP, well above the 60 per cent reference value for debt.
Moreover, shortcomings in Greece's public finance statistics have been a recurrent issue, prompting repeated calls by the Council on the Greek authorities, including in its April 2009 recommendation, to improve the collection and processing of its statistical data. In October 2009, Greece announced further substantial revisions of government deficit and debt data for previous years, and that data has not been validated by Eurostat.
Greece's updated stability programme sets 2012 as the date for reducing the deficit below the 3 per cent reference value. It sets a target of 8.7 per cent of GDP for its 2010 budgetary deficit, which represents a four percentage-point reduction from the estimated 12.7 per cent deficit for 2009. In its decision, adopted today under article 126(9) of the EU treaty, the Council accepts this schedule. It calls on Greece to ensure a budgetary adjustment of at least 4 per cent GDP in 2010 and to bring its deficit back under 3 per cent in 2012 at the latest. The Council has set numerical limits to Greece's government deficits and to annual changes in its consolidated gross debt in 2010, 2011 and 2012. It calls on Greece to implement specific budgetary consolidation measures, including those presented in its stability programme, namely:
– urgent measures to be taken by 15 May 2010;
– supporting measures to safeguard budgetary targets for 2010;
– other measures to be adopted by the end of 2010; and
– other measures to be adopted by 2012.
© European Council
