Council Opinion of 31 January 2000 on the updated Convergence Programme of Greece, 1999 to 2002
Date: 2000-01-31
Institutions: Council of the European Union
Subjects: Greece, economic convergence, public finance

C 60/4

EN

Official Journal of the European Communities

2.3.2000

COUNCIL OPINION

of 31 January 2000

on the updated convergence programme of Greece, 1999 to 2002

(2000/C 60/04)

circumstances.
convergence
programme complies with the requirements of the Stability
and Growth Pact.

the updated

In this

sense,

Considerable progress has been made over the past year in
reducing price inflation; the deflator of private consumption
exceeded marginally the projection of the 1998 programme in
1998, while no deviation is estimated for 1999 from the
increase of 2,5 %; however,
projected average rate of
the
increase in oil prices
slowing down the process of
is
disinflation at present.

the

high

in the

considers

that within

growth
The Council
environment projected
convergence programme,
particular effort must be made by Greece to ensure that the
progress made towards disinflation acquires a lasting character;
such an effort seems to be all the more necessary in view of
the convergence of monetary conditions in Greece to those
prevailing in the euro zone and the potential implications of
such a development on demand and prices; in this context, the
Council welcomes the revaluation of the central rate of the
Greek drachma as from 17 January 2000 which will support
the authorities in their efforts to further reduce inflation in
Greece;
to
reinforce the anti-inflationary stance of the policy instruments
at its disposal, including budgetary and incomes policies; the
wage agreements in 2000 in both public and private sectors
and the cooperation of all social partners are essential to secure
an environment of low-inflation. As regards budgetary policy,
the budgetary targets set in the programme are considered by
the Council as a minimum and the Greek authorities are
invited to do their best
to achieve better outcomes than
planned; in addition, the Council considers that the Greek auth-
orities must be ready to tighten fiscal policy further from 2001
if inflation pressures emerge.

the Greek Government

the Council

invites

The Council acknowledges that considerable progress has been
made in recent period in Greece in introducing structural
reforms, namely in the functioning of
the wider public
sector; it invites the Greek government to continue decisively
in this direction by accelerating the pace of
the necessary
reforms with a view to enhancing competitive conditions and
the good operation of labour, goods and capital markets; such
reforms are necessary both in order to enhance the productive
potential of the economy and to reduce inflationary pressures.

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July
1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic
policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 31 January 2000 the Council examined the 1999 update of
the convergence programme of Greece which covers the period
1999 to 2002. The Council notes that
the 1999 update
maintains as a central objective the compliance with the
convergence criteria which will allow Greece to participate in
monetary union from January 2001. The budgetary and
structural policies outlined
in
compliance with the 1999 Broad Economic Policy Guidelines.

in the programme

are

the

Council

satisfaction

notes with

significant
The
improvement in public finances in recent years. Developments
over the past year indicate that the budgetary target set in the
1998 convergence programme has been met:
the general
Government deficit is estimated at 1,5 % at the end of 1999,
0,6 % of GDP lower than projected in the 1998 programme;
the debt ratio was reduced by 1,2 percentage points to 104,2 %
of GDP.

for GDP

The updated programme
is based on macroeconomic
projections showing strong investment-led growth and medi-
um-term price stability. The 1999 update, building on the
and on good
budgetary consolidation achieved so far
prospects
general
Government deficit to turn to a surplus of 0,2 % of GDP in
2002. The debt ratio is projected to fall to 98,0 % of GDP in
2002. The Council considers that the underlying budgetary
position of
the general Government provides an adequate
safety margin in the course of the programme to prevent the
deficit from breaching the 3 % of GDP threshold in normal

is projecting

growth,

the

(1) OJ L 209, 2.8.1997, p. 1.