Recommendation for a COUNCIL RECOMMENDATION on the National Reform Programme 2011 of Greeceand delivering a Council opinionon the updated Stability Programme of Greece, 2011-2014
Date: 2011-06-07
Institutions: European Commission
Subjects: Greece, balance of payments assistance, budget deficit, economic policy, employment policy, social rights

EUROPEAN COMMISSION 

Brussels, 7.6.2011 
SEC(2011) 808 final 

Recommendation for a 

COUNCIL RECOMMENDATION 

on the National Reform Programme 2011 of Greece 

and delivering a Council opinion 

on the updated Stability Programme of Greece, 2011-2014 

{SEC(2011) 717 final} 

EN 

   EN 

 
 
 
 
  
 
 
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the National Reform Programme 2011 of Greece 

and delivering a Council opinion 

on the updated Stability Programme of Greece, 2011-2014 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121(2) and 148(4) thereof, 

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 , and in particular Article 5(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

After consulting the Economic and Financial Committee, 

Whereas: 

(1) 

(2) 

On  26  March  2010,  the  European  Council  agreed  to  the  European  Commission's 
proposal  to  launch  a  new  strategy  for  jobs  and  growth,  Europe  2020,  based  on 
enhanced coordination of economic policies, which will focus on the key areas where 
action 
to  boost  Europe’s  potential  for  sustainable  growth  and 
competitiveness. 

is  needed 

On 13 July 2010, the Council adopted a recommendation on the broad guidelines for 
the economic policies of the Member States and the Union (2010 to 2014) and on 21 
October  2010,  adopted  a  decision  on  Guidelines  for  the  employment  policies  of  the 
Member States,1 which together form the “integrated guidelines”. Member States were 
invited  to  take  the  integrated  guidelines  into  account  in  their  national  economic  and 
employment policies. 

1  

Maintained for 2011 by Council Decision 2011/308/EU of 19 May 2011. 

EN 

2 

   EN 

 
 
 
 
                                                 
(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

On  12  January  2011,  the  Commission  adopted  the  first  Annual  Growth  Survey, 
marking  the  start  of  a  new  cycle  of  economic  governance  in  the  EU  and  the  first 
European semester of ex-ante and integrated policy coordination, which is anchored in 
the Europe 2020 strategy.  

On  25  March  2011,  the  European  Council  endorsed  the  priorities  for  fiscal 
consolidation  and  structural  reform  (in  line  with  the  Council’s  conclusions  of  15 
February and 7 March 2011 and further to the Commission’s Annual Growth Survey). 
It  underscored  the  need  to  give  priority  to  restoring  sound  budgets  and  fiscal 
sustainability,  reducing  unemployment  through  labour  market  reforms  and  making 
new efforts to enhance growth.  

On 3 May 2010, Greece presented an encompassing adjustment programme supported 
by  financial  assistance  provided  by  the  euro-area  Member  States  and  the  IMF 
amounting  to  EUR  110  billion.  The  accompanying  Memorandum  of  Understanding 
and its successive supplements lay down the economic policy conditions on the basis 
of which the financial assistance is disbursed.  

The  key  elements  of  policy  conditionality  have  been  enshrined  in  Council  Decision 
2010/320/EU  and  its  subsequent  amendements2  addressed  to  Greece  with  a  view  to 
reinforcing  and  deepening  fiscal  surveillance  and  giving  notice  to  Greece  to  take 
measures  for  the  deficit  reduction  judged  necessary  to  remedy  the  situation  of 
excessive deficit under the provisions of Articles 136 and 126(9) of the Treaty.  

On 25 March 2011, the European Council also invited the Member States participating 
in  the  Euro  Plus  Pact  to  present  their  commitments  in  time  to  be  included  in  their 
Stability or Convergence Programmes and their National Reform Programmes. Greece 
has  not  yet  submitted  an  updated  Stability  Programme  nor  have  specific  Euro  Plus 
Pact  commitments  and  actions  for  2011  been  explicitly  communicated  by  Greece. 
These are expected to be submitted to the European Council.  

Over  the  last  decade,  Greece’s  growth  performance  was  based  on  unsustainable 
drivers:  consumption  and  residential  investment  booms  were  accompanied  by  high 
real  wage  increases  and  rapid  credit  growth;  low  real  interest  rates  associated  with 
euro adoption and financial market liberalisation fed the boom. The 2008-2009 global 
crisis  exposed  the  vulnerabilities,  including:  unsustainable  fiscal  policies,  partly 
hidden by unreliable statistics and temporarily high revenues; rigid labour and product 
markets; loss of competitiveness and rising external debt. While not at the origin, the 
banking sector was affected by the economic and confidence crisis. The extent of the 
deterioration  in  the  fiscal  position  was  revealed  late  due  to  grave  deficiencies  in 
Greece's  accounting  and  statistical  systems.  This  delayed  the  implementation  of 
corrective  measures.  As  concerns  about  Greek  fiscal  sustainability  arose  and  global 
risk aversion heightened, market sentiment vis-à-vis Greece worsened sharply in early 
2010.  In  April  2010,  Greece  asked  for  international  financial  assistance  as  it  was 
confronted  with  sizeable  financing  needs  and  not  able  to  access  international  capital 
markets. 

2 

Council Decision of 10 May 2010 (2010/320/EU), (OJ L 145, 11.6.2010, p. 6); Council Decision of 7 
September 2010 (2010/486/EU), (OJ L 241, 14.9.2010, p. 12); Council Decision of 20 December 2010 
(2011/57/EU), (OJ L 26, 29.1.2011, p. 15); Council Decision of 7 March 2011 (2011/257/EU), (OJ L 
110, 29.4.2011, p. 26).  

EN 

3 

   EN 

 
                                                 
(9) 

Greece committed to implementing the economic and financial adjustment programme 
with the aim of correcting fiscal and external imbalances and restoring confidence in 
the  short  term.  In  the  medium  run,  it  should  lay  the  foundations  for  a  growth  model 
that  relies  more  on  investment  and  exports  supporting  growth  and  employment.  The 
programme  foresees  comprehensive  action  on  three  fronts:  (i)  a  frontloaded  fiscal 
consolidation  strategy,  supported  by  structural  fiscal  measures  and  better  fiscal 
control;  (ii)  structural  reforms  in  the  labour  and  product  markets  to  address 
competitiveness and growth; and (iii) efforts to safeguard banking system stability. 

(10)  The  Commission  has  assessed  the  draft  National  Reform  Programme3.  It  has  taken 
into account not only its relevance for sustainable fiscal and socio-economic policy in 
Greece  but  also  its  conformity  with  EU  rules  and  guidance,  given  the  need  to 
strengthen the overall economic governance of the European Union by providing EU 
level input into future national decisions. In this context, the Commission stresses the 
urgency  of  implementing  the  planned  measures  to  comply  with  Council  Decision 
(2010/320), 

HEREBY RECOMMENDS that Greece should:  

fully implement the measures as laid down in the Council Decision 2010/320/EU as amended 
by  Council  Decision  XXXX/XXX,  and  further  specified 
the  Memorandum  of 
Understanding  of  XX/XX/XXXX  and  its  subsequent  supplements[,  in  particular  the  last 
supplement of XX/XX/XXXX]. 

in 

Done at Brussels, 

For the Council 
The President 

3 

SEC(2011) 717. 

EN 

4 

   EN