Greece's finances are on the right track although the country still needs to take additional measures to further cut its public debt and support its pension system, Joaquin Almunia, the EU Monetary Affairs Commissioner, said here on Tuesday.

The European Commission published its evaluation on Greece's economic stability program for the period 2006-2009, noting that Greece cut its excessive fiscal deficit in 2006, while underlining that long-term fiscal stability was needed for the economy to benefit from strong growth and to reduce the risk of higher than expected deficits after 2008.

Specifically, the Commission announced that Greece's stability program for 2006-2009 primarily aimed at reducing its excessive deficit, according to recommendations made by the Council of Ministers, as well as to set medium-term targets for balanced or surplus budgets using structural measures.

By 2009, the program envisages a gradual reduction of the fiscal deficit to 1.25 pct of GDP, and of the public debt to 91.25 pct of GDP, the Commission said.

The EU's executive said the long-term impact from an ageing population on the country's fiscal condition was "uncertain", since there were no available long-term forecasts for pension cost in Greece. The Commission noted, however, that due to a high public debt and expected significant pension spending in the country, Greece faced high risk over the stability of its fiscal condition.

In general, the Commission said Greece's stability program was compatible with a target of reducing its excessive deficit in 2006, although the rate of adjustment in the next few years, after 2007, should be accelerated to fully exploit strong growth rates and to reduce the risk of presenting larger than expected deficits after 2008.
Based on the above, the Council of Ministers made three recommendations for the country, namely, to ensure a reduction in the public debt to take advantage of a favorable economic conjunction.

Secondly, the EU urged Greece to continue improving its fiscal data, which will increase transparency, clarify long-term fiscal strategy and effectively implement mechanisms to properly record and regulate primary spending.

Finally, the Commission said Athens, in view of its high public debt and expected increase in pension spending, should improve the long-term stability of its finances by controlling public spending in its pension and social insurance systems, and implement reforms.

Greece should also present, as soon as possible, long-term forecasts for its spending on social security.

FinMin says Commission report acknowledges fiscal progress in the country
With its assessment of the Greek updated Stability and Growth Programme the European Commission acknowledges the significant progress made in restructuring the country’s public finances, a reduction of the deficit and of the public debt and restoring transparency in statistical data, Greek Economy and Finance Minister George Alogoskoufis said on Tuesday.

He was commenting on the publication of the European Commission’s assessment report on the country’s stability and growth program.

“We are mending a bad situation we inherited and moved steadily towards achieving balanced or surplus budgets by 2012,” the Greek minister said, adding “We are achieving fiscal stabilization by strengthening growth rates and combating unemployment. The growth rate, based on latest figures by the statistics services, was at least 4.2 pct in 2006, clearly above targets set both in the budget and the stability programme”.

The government, Alogoskoufis said, remained steadily focused on its reform policy aiming to continue a restructuring of public finances and further strengthening growth, employment and social cohesion.

Source: Athens News Agency

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