2007/465/EC: Council Decision of 5 June 2007 abrogating Decision 2004/917/EC on the existence of an excessive deficit in Greece
Date: 2007-06-05
Institutions: Council of the European Union
Subjects: Council of the European Union, EC Decision, Greece, budget deficit, public finance, repeal

6.7.2007

EN

Official Journal of the European Union

L 176/21

COUNCIL DECISION

of 5 June 2007

abrogating Decision 2004/917/EC on the existence of an excessive deficit in Greece

(2007/465/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community, and in particular Article 104(12) thereof,

establishing the European

Having regard to the recommendation from the Commission,

(4)

(5)

Whereas:

(1)

(2)

(3)

the Treaty,

By Council Decision 2004/917/EC (1), following a recom-
mendation from the Commission in accordance with
it was decided that an
Article 104(6) of
excessive deficit existed in Greece. The Council noted
that the general government deficit was 3,2 % of GDP
in 2003, above the 3 % of GDP Treaty reference value,
while general government gross debt stood at 103 % of
GDP, well above the 60 % of GDP Treaty reference value.
Figures on general government deficit and general
government gross debt
for 2003 were revised on
several occasions subsequent to Decision 2004/917/EC.
According to the most recent data, the deficit and debt
represented 6,2 % of GDP and 107,8 % of GDP respec-
tively.

the

On 6 July 2004, in accordance with Article 104(7) of the
Treaty and Article 3(4) of Council Regulation (EC)
No 1467/97 of 7 July 1997 on speeding up and clari-
fying
excessive deficit
procedure (2), the Council addressed a recommendation
to Greece with a view to bringing the excessive deficit
situation to an end by 2005 at the latest. The recom-
mendation was made public.

implementation of

the

by

19

2005,

January

On
Council Decision
2005/334/EC (3), in accordance with Article 104(8), the
Council decided, based on a recommendation from the
Commission, that Greece had not taken effective action
in response to the Council
recommendation under
Article 104(7). On 17 February 2005, by Council
Decision 2005/441/EC (4),
the Council decided, based
on a recommendation from the Commission, to give
notice to Greece in accordance with Article 104(9) to
take measures for the deficit reduction judged necessary
in order to remedy the situation of excessive deficit and
extended the deadline for the correction by one year, to
2006.

(1) OJ L 389, 30.12.2004, p. 25.
(2) OJ L 209, 2.8.1997, p. 6. Regulation as amended by Regulation (EC)

No 1056/2005 (OJ L 174, 7.7.2005, p. 5).

(3) OJ L 107, 28.4.2005, p. 24.
(4) OJ L 153, 16.6.2005, p. 29.

In accordance with Article 104(12) of
the Treaty, a
Council Decision on the existence of an excessive
deficit is to be abrogated when the excessive deficit in
the Member State concerned has,
in the view of the
Council, been corrected.

for

the data

implementation of

In accordance with the Protocol on the excessive deficit
the Commission
procedure annexed to the Treaty,
provides
the
the
procedure. As part of the application of the Protocol,
Member States are to notify data on government
deficits and debt and other associated variables twice a
year, namely before 1 April and before 1 October,
in
accordance with Article 4 of Council Regulation (EC)
No 3605/93 of 22 November 1993 on the application
the Protocol on the excessive deficit procedure
of
annexed to the Treaty
the European
Community (5).

establishing

(6)

Based on data provided by the Commission (Eurostat) in
accordance with Article 8g(1) of Regulation (EC) No
3605/93 following the notification by Greece on 1
April 2007 and on the Commission services’ spring
2007 forecast, the following conclusions are warranted:

— the general government deficit was reduced from
7,9 % of GDP in 2004 to 2,6 % of GDP in 2006,
which is below the 3 % of GDP deficit reference
value. This is identical
in the
December 2005 update of the stability programme,

to the target set

— revenues and expenditure contributed to the nominal
adjustment of almost 3 percentage points of GDP
compared to the 2005 deficit of 5,5 % in almost
equal shares. Expressed in terms of the GDP, total
increased by 1½ percentage points of
revenues
GDP, with indirect taxes accounting for one-half of
a percentage point of GDP. The remaining percentage
point is accounted for by increases in social contri-
butions and other revenues, including capital transfers
(EU transfers). Total expenditure was reduced by 1¼
percentage points of GDP, mainly driven by
reductions
in primary expenditure (by 0,5 % of
GDP) and in interest expenditure (0,25 % of GDP).
Capital expenditures were also reduced by around
one-half of a percentage point of GDP. One-off
The
revenues
improvement
the
cyclically-adjusted balance net of one-off and other
temporary measures) is estimated at 2,25 % of GDP
in 2006. The deficit debt adjustment at 2,3 % of GDP
is largely explained,

to
structural balance

amounted
in the

0,6 % of GDP.

(i.e.

(5) OJ L 332, 31.12.1993, p. 7. Regulation as last amended by Regu-

lation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1).

L 176/22

EN

Official Journal of the European Union

6.7.2007

— for 2007,

as well

and the

as permanent

target of 2,4 % of GDP set

the Commission services’ spring 2007
forecast projects that
the deficit will be reduced
further, to 2,4 % of GDP. This is in line with the
official deficit
in the
December 2006 update of the stability programme.
However, the Commission services’ forecast includes
additional one-off revenues amounting to 0,25 % of
GDP,
expenditure-saving
measures amounting to about 0,25 % of GDP, both
as announced by the cut-off date of the Commission
services spring 2007 forecast and thus not reflected
in the December 2006 official target. In spite of this,
the spring forecast deficit projection for 2007 is not
better than the target as the impact of these new
measures is offset both by more cautious growth
assumptions
the permanent
fact
measures planned for 2007 would not, in the view
of the Commission, fully replace the decline in one-
off revenues. Without one-offs, the deficit would still
be below the reference value, at 2,9 % of GDP. For
2008, the spring forecast projects, on a no-policy-
change basis, a deficit of 2,7 % of GDP without
inclusion of one-offs for 2008. This indicates that
the deficit has been brought below the 3 % of GDP
ceiling in a credible and sustainable manner. The
structural balance is projected to improve in 2007
by around one quarter of a percentage point of
GDP and, on a no-policy change basis, by a
in 2008. This has to be seen
marginal amount
against
the
medium-term objective for the budgetary position,
which for Greece is a balanced position in structural
terms,

the need to make progress

towards

that

well above the 60 % of GDP reference value. The debt
ratio can be considered as sufficiently diminishing
towards the 60 % of GDP reference value.

(7)

statistical

improved

authorities

The Greek
their
procedures, which led to a significant reduction in the
statistical discrepancies and an overall higher quality of
the general government data. The Greek authorities are
committed to implementing fully the action plan to
improve public finance statistics. As a result, Eurostat
withdrew its reservations on the quality of the reported
data.

(8)

In the view of the Council, the excessive deficit in Greece
has been corrected and Decision 2004/917/EC should
therefore be abrogated,

HAS ADOPTED THIS DECISION:

Article 1

From an overall assessment it follows that the excessive deficit
situation in Greece has been corrected.

Article 2

Decision 2004/917/EC is hereby abrogated.

Article 3

This Decision is addressed to the Hellenic Republic.

Done at Luxembourg, 5 June 2007.

— government debt declined from 108,5 % of GDP in
2004 to 104,5 % in 2006. According to the spring
2007 forecast,
the debt ratio is projected to fall
further to around 97,5 % by the end of 2008, still

For the Council
The President

P. STEINBRÜCK