Brussels to praise Greece’s progress

Greece’s fourth post-bailout assessment by the European Commission, set to be published Wednesday, is expected to be fairly positive, paving the way for the disbursement of 767 million euros in eurozone central banks’ profits from Greek bond holdings (SMPs and ANFAs).

Although that decision will take place at next month’s Eurogroup meeting, the report sends a strong message that Greece “has undertaken specific reform action so as to fulfill its commitments.” The Commission also issued some warnings regarding certain domains, but for most it says that the government has committed to making the necessary moves.

The report argues that the primary surplus target will be attained both this year and next (reaching 3.8 percent and 3.5 percent of gross domestic product respectively) and stresses that “the key reforms adopted to date by the Greek authorities and their overall growth-friendly rhetoric have enjoyed a positive response from the markets.”

Brussels calls for the maintenance of the reform momentum so that the prospects of the country remain positive. It also views as positive the tax cuts introduced by the government, noting that the pro-growth tax changes are expected to “activate investments and employment and contribute to greater growth and consumption.”

The report recognizes that the economic recovery continued in the first half of 2019 and is expected to withstand the external negative factors, despite its weak start to the year. For the whole of 2019, growth is projected to come to 1.8 percent, rising to 2.3 percent in 2020, almost twice as the eurozone average of 1.2 percent.

Regarding the labor market, Brussels foresees a reduction of the jobless rate from 19.3 percent in 2018 to 17 percent this year and 15 percent in 2020, while projecting that inflation will remain anemic. The Commission is also very positive on the privatizations front, noting that the government has “particularly strengthened the momentum,” and records progress on Elliniko, Alimos Marina, Hellenic Petroleum, Athens Airport and the regional airports, Public Gas Corporation (DEPA) and Egnatia Odos, but adds that there are certain obstacles that should be surmounted.