10 reasons why Greece’s new programme is good news
The Eurogroup endorsed on 14 August the agreement for a third stability support programme for Greece. This has now been finalised, following national procedures where needed.
Prime Minister Tsipras announced his resignation this Thursday, August 20 to open the process of snap elections in the coming weeks. We have taken note, within the Commission, of that decision, which in no way questions the financial assistance agreement between Greece and its European partners. The decision by Alexis Tsipras has its logic –Greek Prime Minister needed to find again, or rather to find – consistent majority in line with its courageous choices. Elections are a national democratic process, and I fully respect the sovereignty of the Greek people – as I have always done.
I hope that this process allows a confirmation of the commitment towards Europe and reaffirms Greece’s support of the stability program. Broad support of citizens and resolute implementation are key to enable the success of this plan, which I am convinced is essential to the future of the country. The reform process must continue as quickly as possible, in the interest of all and in line with commitments.
In this context, I want to reiterate that this agreement is good news, not only for the stability and resilience of Greece’s economy but also for the European project and the EU as a whole. It opens the way for a necessary modernisation of the Greek economy that sets the conditions for boosting economic growth, jobs, and long-term stability. After six months of sometimes difficult negotiations, we have now reached a comprehensive and fair agreement. It requires commitments on all sides, not least of which to address reform needs but also social injustice.
A return to growth is possible, and now more than ever. In 2014, Greece had already begun to emerge from its long recession, with growth turning positive and employment beginning to drop. The uncertainty that characterised the first half of this year has set back that economic recovery. But the end-objective has never been lost – that Greece is once again a stable, prosperous and responsible member of our Union. Today page uncertainty must turn permanently to make way for the resolution. Today, the page of uncertainty must be turned permanently to make way for the page of resolution.
This agreement gives Greece an opportunity to change the fundamentals of its economy; to embark on a new and sustainable path of growth, based on common trust, reform commitments, and solidarity from its European partners. As Europe as a whole turns its back to the economic crisis, it is time to create a positive momentum for Greece, and with Greece. It is time for recovery, reawakening, and renewal. I am convinced that Greece can achieve this and improve its economic potential by implementing the right reforms.
Let me stress ten reasons why this agreement is good news for the Greek people and for the rest of Europe.
- We have reconfirmed the integrity of the Eurozone. The agreement confirms what I have continued to stress and work towards: that we are now all on a path to ensure a sustainable future for Greece inside the euro. This represents a major success that we can collectively be proud of. As President Juncker stated, Greece is and will irreversibly remain a member of the Eurozone. Our destinies remain linked, as they have always been. It appears to me essential that pro-European path is reinforced in the coming weeks.
- Public finances are being stabilised and further strengthened. Thanks to the unprecedented adjustment already carried out to tackle the extreme imbalances in public finances, they are now on a more sustainable footing compared to the pre-crisis period. The approach agreed to achieve the remaining adjustment is credible, economically efficient and socially fair. It balances the need to support economic recovery as well as the imperative to bring debt back to sustainable levels. I truly believe these measures – which include, among many, a modernisation of the VAT and pension systems, boosting tax collection, fighting fraud and tax evasion, and securing the independence of administrative institutions – are key in order to put the country on the right track again.
- There is a clear commitment to ensure Greece’s debt sustainability. Building on the measures already taken in recent years to lighten Greece’s debt burden, the Eurogroup has stated that it is willing to consider additional measures such as possible longer grace and repayment periods if needed, with decisions to be taken once the first quarterly review of the new programme is successfully completed. As stated by the Euro Summit statement last month, no haircut will be decided.
- Consumers’ interests are being placed before those of vested interests. More open markets are essential to create economic opportunities and improve social fairness. Numerous initiatives have been adopted or are in the pipeline to free up consumers’ access to goods and services, including in the energy sector, and to make it easier for jobseekers to access regulated professions. There will be an unprecedented attack on red tape, guided by the OECD and World Bank.
- The banking sector will be repaired and the stability of the financial system strengthened, in the interests of the wider economy. With the support of relevant European institutions, including the Commission and the new Single Supervisory Mechanism, Greece has committed to swiftly repair, recapitalise, and strengthen its banks so that the flow of credit to the economy can restart and provide support to a recovery.
- The labour market will be further modernised to boost job creation in a way that is fair and reflects European best practice. The Greek authorities are committed to achieve EU best practice across the range of labour market legislations to improve employment opportunities and ensure fairness in the labour market, which is essential for social cohesion in Greece.
- The privatisation programme will be thoroughly revamped to draw in much needed investment while reducing debt. The Government has now committed to proceed with an ambitious and transparent privatisation programme, with a new fund to be established by the end of this year in order to maximize the value of potential assets. Privatisations in Greece will help modernise the economy, make it more productive and reduce public debt.
- The Greek state public administration will be modernised in the interests of citizens. Particular attention will be paid to increasing the efficiency of the public sector in the delivery of essential public goods and services, and enhance the efficiency of the judicial system as well as upgrade the fight against corruption and tax evasion.
- The Commission is committed to help Greece spend its EU funds better and more quickly. One of the major achievements of the Commission’s Task Force for Greece was to dramatically boost absorption of EU funds available to it in the period 2007-2013. We are already working hard to help Greece make the most of the €35 billion allocated to it for the period 2014-2020. By supporting demand, investment initiatives will be an essential complement to the growth-enhancing structural reforms that are at the heart of the programme.
- Fairness is at the heart of this programme of reforms. The need for social justice, both across and within generations, has been prominent in the discussions on the new programme. In line with President Juncker’s commitment, the programme has for the first time been subject to a social impact study. Fiscal constraints are imposing hard choices and it is vital that the burden of adjustment is borne by all parts of society, taking into account the ability to pay. With the support of the European Commission, Greece is committed to creating a genuine social safety net, which targets scarce resources at those who need it most. This includes providing access to health care for all – including the uninsured – and rolling out a Guaranteed Minimum Income scheme.
As European Commissioner, as a European citizen, and as a social-democrat, I have fought over the past weeks, months and years to ensure the integrity of the Eurozone and to contribute to a fair agreement. The 11 million Greek people, who share our aspirations for a Europe of progress, employment and prosperity, have remained a focal point throughout the negotiations.
Today, I call for continuation of the ongoing work and maintaining the momentum for renewed growth, greater stability, better jobs and new investment. This is for the benefit of the Greek people themselves, including the younger generations and the most vulnerable. This is for the benefit of all Europeans. Together, we have to keep on this progressive, European and reformist path.