The EU Commission activated an enhanced surveillance framework for Greece Wednesday to support implementation of reforms following the conclusion of its bailout through the European Stability Mechanism.
Greece will conclude its ESM stability support programme on 20 August, safeguarding its place in the eurozone. This step is a major achievement, says the EU executive, and the result of the sacrifices of the Greek people, Greece’s commitment to reforms, and the solidarity of its European partners.
The decision to activate the enhanced surveillance framework facilitates Greece’s normalisation and supports completion, delivery and continued implementation of reforms agreed under the programme, in line with the commitments made by the Greek authorities. This is seen as crucial to building market confidence and thus to strengthening Greece’s economic recovery, particularly in the immediate post-programme period.
“The 20th of August will mark a new beginning for Greece,” said the EC’s Financial Stability vice-president: “Enhanced surveillance is there to help Greece build confidence with markets, investors and companies: they all want stability and predictability. This is the way to attract more investment and ensure sustainable growth, which will bring new jobs and lead to better living and social conditions for the Greek people.”
The decision follows the agreement reached at the Eurogroup on 22 June, which confirmed that Greece had implemented all of the prior actions under the fourth and final review of the programme and decided upon a strong package of debt measures that will allow Greece to once again stand on its own two feet without financial assistance from partners. As part of the comprehensive agreement reached at the Eurogroup, the Greek authorities committed to complete the implementation of key reforms agreed under the current programme. They also made specific policy commitments to finalise a number of key structural reforms already initiated and agreed to the activation of the enhanced surveillance framework.
Enhanced surveillance is a robust post-programme surveillance framework that will allow for a close monitoring of the economic, fiscal and financial situation and its evolution in Greece. Its activation was considered appropriate due to the protracted nature of the crisis Greece has faced, the country’s debt position, the need for continued structural reform implementation to engender a sustainable economic recovery, and remaining vulnerabilities.
Enhanced surveillance will facilitate Greece’s return to a normal situation in which it sets its own policy objectives, while at the same time allowing for a prudent policy path well beyond the programme horizon. As per the Eurogroup agreement, this policy path should preserve the objectives of the key reforms taken up under the ESM programme. It does not entail any new reform elements or commitments, and therefore marks a clear end to years of financial assistance programmes.
This framework provides for quarterly review missions to identify risks early, allowing for steps to be taken to address those risks at an early stage. The Commission will issue quarterly reports of its findings to the European Parliament, the Hellenic Parliament and the Eurogroup Working Group/Economic and Financial Committee, as set out in the relevant Regulation. Activation of policy-contingent debt measures agreed at the Eurogroup meeting of June 22 will be based on positive reports conducted under the enhanced surveillance framework.
Today’s decision also provides that the Commission will undertake enhanced surveillance in liaison with the ECB and, where appropriate, the International Monetary Fund. The ESM will also participate. At the same time, as of the end of its stability support programme on 20 August, Greece will be fully integrated into the European Semester framework of economic and social policy coordination. Synergies between the enhanced surveillance and European Semester processes will be maximised so as to avoid unnecessary burdens on the administration and ensure coherence.