End of enhanced surveillance – No to budgetary barriers

End of enhanced surveillance – No to budgetary barriers

By Tasos Dasopoulos

Restrictions on fiscal policy in countries with high debt, such as Greece, will be decided today by the Eurogroup, about a month before the council on June 16, when it will formally approve Greece’s exit from the enhanced supervision regime.

THE report from the Commission for the 14th evaluation paved the way for the lifting of the special regime that came into force in the summer of 2018, especially for Greece. Specifically, he proposed to the Ministry of Foreign Affairs of the Eurozone the end of the enhanced supervision regime, stating that Greece has fulfilled almost all the obligations undertaken by leaving the 3rd Memorandum. At the same time, he proposed the implementation of another “installment” of the medium-term measures for the relief of the Greek debt. In other words, he suggested the payment of another installment of approximately 750 million euros from bond profits (ANFA’s SNP’s) and the suspension of the interest penalty penalty that the country had been charged since 2016, for an 11 billion loan made by Greece in 2012 for debt repurchase.

The report also cited areas of commitment that have progressed well but were delayed due to the crisis caused by the coronavirus pandemic. Issues such as the final settlement of non-performing loans, the completion of the repayment of overdue public debts to suppliers, the granting of arrears of pensions, the ratification of forest maps and reforms in health and justice, will be gradually completed and finally completed. time.

The report on the exit from the enhanced supervision and the installment from the profits of the bonds will have to be approved by the Council of Finance Ministers of the Eurozone on June 16, so that Greece will finally enter the supervisory status of the European Semester from August 21 .

The Eurogroup

In the meantime, the current Council of Ministers of the Eurozone will discuss the recent spring assessments of the Commission and will assess the impact on the EU economy of high inflation and the effects of the war in Ukraine. At the same time, as planned, the guidelines published by the Commission in March for the 2023 budgets will be re-examined. Despite the objections from some countries (mainly Germany), it is expected energy crisis and the uncertainty of the war in Ukraine – to extend fiscal flexibility for another year, in the form of an extension of the total escape clause.

However, the suspension of fiscal rules will not be “horizontal”. The Stability Pact may be suspended for another year, but the countries with high debt (Greece, Italy, Spain, Portugal) will enter into a special regime. They will not have any specific goals, but their spending, especially on support measures, will be closely monitored by Brussels. The signal of prudent fiscal policy for over-indebted countries was sent by Economic Affairs Commissioner Paolo Gentiloni himself last Monday, urging them to be extra careful with their spending on nationally-funded support measures.

No surprise

Competent sources of YPOIK, referring to the issue, stressed that the position of the Commission is known and that Greece’s position is to continue the prudent fiscal policy. This, not only because of the demand of the institutions. As they explained, apart from our partners, the markets of the Greek economy are also monitored, at the moment when Greece is trying to regain the investment level and in fact in an environment of rising interest rates by the ECB.

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Source: Capital