Council Opinion of 12 February 2001 on the stability programme of Greece, 2000-2004
Date: 2001-02-12
Institutions: Council of the European Union
Subjects: Greece, coordination of EMU policies, economic convergence

9.3.2001

EN

Official Journal of the European Communities

C 77/1

I

(Information)

COUNCIL

COUNCIL OPINION

of 12 February 2001

on the stability programme of Greece, 2000-2004

(2001/C 77/01)

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 5(2) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

stability programme was

On 12 February 2001, the Council examined the first stability
programme of Greece which covers the period 2000-2004.
The
submitted by the Greek
Government within six months of the Council Decision of
19 June 2000 on the adoption by Greece of
the single
currency on 1 January 2001 (2).

The Council considers that the projected budgetary position
provides adequate safety margin against breaching the 3 % of
threshold in normal circumstances and is in
GDP deficit
conformity with the requirements of the stability and growth
pact. The Council commends the fiscal consolidation strategy
of the programme, centred on high primary surpluses, which is
in reducing rapidly the still very high government
essential
debt ratio and prepares for future challenges, notably the
budgetary burden from ageing population. The Council
considers, however, that such a strategy should be primarily
based on an adequate control of primary expenditure increase
through clear and binding norms with the aim of reducing the
current expenditure ratio.

The Council warns that under conditions of high GDP growth,
according to the projections, combined with easing monetary
the
conditions, renewed inflationary pressures may persist;
Council considers that risks of overheating of the economy
from
need to be contained through determined support
domestic policies, mainly a tight fiscal stance,
in particular
through restraint on current expenditure, and by ensuring
wage moderation.

The stability programme is projecting robust real GDP growth
rates, accelerating from 4,1 % in 2000 to 5,5 % in 2004,
strong exports and
supported by high investment
the
sustained private consumption. The Council considers
real GDP
stability
programme as ambitious, at the upper range of possibilities.
The programme presents also an alternative scenario projecting
lower, though still robust, real GDP growth based in particular
on a higher assumption for imported oil prices.

forecasts

included

growth

rates,

the

in

the baseline macroeconomic scenario,

On the basis of
the
programme is projecting a general government surplus of
0,5 % of GDP in 2001 which will rise to 2 % of GDP in
2004. The programme is based on the fiscal consolidation
strategy followed until now by the Greek convergence
programmes,
primary
surpluses supported, however, by a significant reduction in
interest payments as percent of GDP, resulting from lower
interest rates and a declining government debt ratio. The
general government debt ratio is expected to decline by 20
percentage points of GDP, to 84,0 % of GDP in 2004.

in maintaining

consisting

high

(1) OJ L 209, 2.8.1997, p. 1.
(2) OJ L 167, 7.7.2000, p. 19.

The Council notes that the programme includes a number of
market liberalisation measures, the setting-up of an appropriate
regulatory framework and structural reforms in the labour,
product and capital markets while a reform of
the social
security system is announced for 2001. The Council considers,
however, that the ambitious growth and employment objectives
of the stability programme, and future challenges, require a
more determined attitude in the reform effort; the Council
encourages the Greek Government to accelerate the implemen-
tation of necessary reforms, in particular in the labour market
and the social
to enhance the
potential of the economy, strengthen its competitiveness and
improve the conditions for sustainable growth and employment
creation.

security system,

in order

the

that

considers

stability programme

The Council
is
consistent with the broad economic policy guidelines. The
Council
to pay particular
attention to the need for reform of the pension system, and
invites them to address the budgetary consequences of ageing
in the next update of the stability programme.

the Greek authorities

invites