EC: Greece must show budget-cutting ‘determination’
The next Greek government must pursue budget cuts with “determination” to be eligible for emergency aid, warned the European Commission, which said it may review progress two weeks after Greece’s June 17 elections.
The message on Wednesday highlights the limited room that Greek politicians will have to renegotiate fiscal-austerity conditions tied to international aid. Greeks return to the polls next month after an inconclusive May 6 vote catapulted a party opposed to the rescue terms into second place, raising concerns that Greece may have to abandon the 17-nation euro.
Greece, which has struggled to meet targets for narrowing its budget deficit while receiving aid pledges of 240 billion euros ($299 billion) over the past two years, faces a cumulative fiscal gap in 2013-2014 of 5.5 percent of gross domestic product, according to the commission.
“Greece will therefore have to make substantial additional expenditure cuts in the coming months,” the commission, the European Union’s executive arm in Brussels, said in a report on Wednesday.
“Comprehensive international financial assistance can continue to be provided only if policy implementation improves.”
The report, part of an annual assessment of budget programs across the 27-nation EU, lists shortcomings by Greek authorities in enacting an economic overhaul first outlined when Greece got an initial 110 billion-euro rescue from the euro area and the International Monetary Fund in May 2010. A second 130 billion- euro loan package, coupled with the biggest writedown of privately held debt, followed this year.
The commission cited “insufficient progress” by Greece in bolstering tax collection and improving public procurement and said the sale of state-owned assets has been “slower than planned.”