The European Commission on Wednesday announced the specific terms for Greece’s “enhanced surveillance” by creditors after the third bailout ends in August 2018, underlining that its intent is to support Athens in its implementation of a reforms package and its normalization.
As previously reported, quarterly audits will be held by creditors, with results included in reports subsequently submitted to the European Parliament, Greece’s Parliament and the Euro Working Group.
Activation of whatever debt relief measures will also hinge on positive quarterly reports.
Greece’s post-bailout supervision will be exercised by the Commission, the ECB and, when deemed necessary, by the IMF, while the ESM will also participate.
The Commission’ s press release reads:
The Commission has adopted a decision to activate the enhanced surveillance framework for Greece to support the implementation of agreed reforms following the successful conclusion of the European Stability Mechanism (ESM) stability support programme.
On 20 August, Greece will conclude its ESM stability support programme, safeguarding its place at the heart of the euro area and the European Union. This major achievement is the result of the sacrifices of the Greek people, Greece’s commitment to reforms, and the solidarity of its European partners.
Today’s Commission decision to activate the enhanced surveillance framework, as provided for in Regulation (EU) No 472/2013 (part of the so-called “two-pack”), facilitates Greece’s normalisation, building on the progress that has been made. It will support the completion, delivery and continued implementation of reforms agreed under the programme, in line with the commitments made by the Greek authorities. This is crucial to building market confidence and thus to strengthening Greece’s economic recovery, particularly in the immediate post-programme period.
Valdis Dombrovskis, Vice-President for the Euro and Social Dialogue, also in charge of Financial Stability, Financial Services and Capital Markets Union, said: “The 20th of August will mark a new beginning for Greece. It is important for the country to continue with prudent fiscal and macroeconomic policies, as well as to complete the agreed reforms. 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.”
Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “Greece is now able to stand on its own two feet; that does not mean that it must stand alone. Europe will remain engaged and committed to supporting the country, and so will the European Commission. Today’s decision is about just that. Enhanced surveillance is not a fourth programme: it involves no new commitments or conditions. It is a framework to support the completion and delivery of ongoing reforms. Why is that so important? Because Greece’s recovery is not an event: it is a process.”
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.”
