EU endorses Greek deficit cutting plan

The permitted EU ceiling for budget deficits is 3 percent of GDP.

EU endorses Greek deficit cutting plan

The European Commission endorsed on Wednesday a Greek plan to cut its budget deficit below 3 percent of GDP by the end of 2012, but said it must take further steps to cut public sector wages and put finances in order.

The European Union executive said Athens must submit an interim report on its deficit reduction progress by mid-March.

It said the plan would not be easy to implement but Greece, whose problems have prompted suggestions the EU may have to bail it out and that other countries could run into similar problems, must be ready to make further deep fiscal adjustments.

"We are endorsing the Greek program. But at the same time we know that the implementation of the program is not easy. It is difficult. This deserves support," EU Economic and Monetary Affairs Commissioner Joaquin Almunia told a news conference.

"If the program is followed by decisions, by actions ... this will have a positive effect on the market. If decisions are not there, the markets will be putting additional pressure."

Sharp upward revisions to Greek deficit and debt figures last year led to ratings downgrades and sent yields soaring, further denting investors' confidence.

Asked if Europe might have to turn to the International Monetary Fund, Almunia said he was confident the 27-country EU and 16-state euro zone could cope on their won. EU officials have dismissed talk of a bailout for Greece.

The Commission's recommendations on what Greece should do were broadly in line with promises made by Athens in its long-term austerity plan, which forecasts a gap of 2.8 percent in 2012, down from 12.7 percent in 2009.

The permitted EU ceiling for budget deficits is 3 percent of GDP.

The Commission will send its recommendations to EU finance ministers for approval at a meeting on Feb. 15-16.

It also launched legal action against Greece for sending false statistics and warned Athens over its policies in areas other than budget reform, using powers under the EU's Lisbon reform treaty for the first time.

Warnings can be issued to countries whose economic policies are not consistent with the 27-country bloc's guidelines, or countries that risk jeopardising the proper functioning of the euro zone.


Last Mod: 03 Şubat 2010, 14:02
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