The new Greek government has not yet sworn in and the country’s lenders, the Eurogroup, sent a clear message to new Prime Minister, Kyriakos Mitsotakis: He has to stick to the commitments of the previous government.
Eurogroup chief Mario Centeno warned that “commitments are commitments and if we break those, credibility is the first thing to fall apart and this brings about a lack of confidence, investment and (…) growth. So my advice will be: keep up with the commitments.”
EU Commissioner Pierre Moscovici underlined that “only the Eurogroup can adjust surplus target of 3.5%.”
The head of European Stability Mechanism, Klaus Regling, said that “obviously, developments in Greece are of particular importance for us,” and stressed that “the ESM is the largest creditor of Greece. We are a long-term partner of Greece, given that our loans run for more than 40 years, and we will work closely with any government that Greek voters elect.”
Saying that the third enhanced surveillance report presented by Moscovici on Monday “talks about the concerns that have come up recently, Regling added:
“But it’s also fair to say that the Greek economy is in much better shape today than it was, let’s say, four or eight years ago. Looking at the fiscal situation, there’s also a substantial cash buffer, growth is back, and interest rates in the secondary market are very low.”
Indirectly referring also to the new ND government, Regling said “all that is very good, however, we are concerned about some of the decisions taken in the last two months, which were also adopted in the Greek parliament by all the major parties.”
He added “because some of these decisions are not good for growth – backtracking on some reforms, not spending the full public investment budget, arrears are still at a high level; all that is not good for growth, therefore not good for debt sustainability. Therefore we need to monitor this closely.”
He stressed that “it depends on political decisions in the second half of this year, and in particular, as far as the 2020 budget is concerned, how the fiscal path will look like; how measures to promote growth will be implemented. Therefore, the assessment will be done once we know more about the decisions of the new government.”
Regling said that he will be visiting Athens next week.
A similar message was sent also by the European Commission to Mitsotakis.
“As you know, now the economic indicators have improved considerably and the country has come out of a programme…I think this is exactly what President Juncker did note in his letter when he said that a lot had been achieved but, of course, more work remains to be done, and he assured the incoming government that they can continue counting on the full support of the European Commission to ensure that the country and its people reap the full benefits of the efforts that were undertaken in recent years,” EU Commission spokesperson Mina Andreeva told reporters on Monday.
“We have, of course, full confidence now that the new Greek government will fulfill all these commitments that the Greek State has undertaken and that the completion, delivery and continued implementation of the reforms that were agreed under the stability support programme will continue to be monitored through the enhanced surveillance framework,” she added.
