The Commission notes that the successful achievement of most of the commitments and the effective implementation of reforms improved the resilience of the Greek economy and strengthened its financial stability
Greece’s draft budget is in line with the fiscal guidelines contained in the Council’s recommendation of 12 July 2022, the Commission stresses. In addition, the Commission recommends to the Eurogroup to approve the last tranche of 748 million euros related to the relief of the Greek public debt.
In the budget assessment published today, the Commission states that, in 2023, based on the Commission’s forecasts and including the information incorporated in Greece’s Draft Budget, the increase in nationally financed current expenditure is expected to be lower than the medium-term potential increase in production. The development of nationally financed primary expenditure is therefore in line with the Council’s recommendation. Greece plans to finance additional investments through the RRF and other EU funds and plans to maintain nationally funded investments and finance public investments for the green and digital transition. At the same time, it is pointed out that according to the Commission, Greece has made some progress regarding the structural part of the fiscal recommendations contained in the Council’s recommendation of July 12, 2022 in the context of the European Semester and thus calls on the authorities to accelerate progress.
The European Commission underlines that an overall description of the progress recorded in terms of the implementation of the specific recommendations per member state will be made in the context of the 2023 report and the evaluation that will be made in the context of the recommendations that the Commission will address (for each Member State) in spring 2023.
Regarding the post-memorandum supervision report, it notes that the successful achievement of most of the commitments and the effective implementation of reforms improved the resilience of the Greek economy and strengthened its financial stability. This significantly reduced the risks of adverse spillovers to other Member States in the euro area. Therefore, the Commission did not extend the monitoring aid, which ended on 20 August 2022. Despite rising inflationary pressures and the protracted energy crisis, the Greek economy grew at a steady pace in the first half of 2022. Real GDP grew by 7.8 % in the first two quarters of the year, largely driven by private consumption, goods exports and the positive tourism season, while investment has already started to slow down in the second quarter. The unemployment rate fell further to 11.8% in September, down 1.5 percentage points from the same month a year ago. According to the autumn forecasts of the European Commission, economic activity is expected to slow down significantly. Starting from the second half of this year, both domestic and external demand are expected to weaken. It is noted that the policy measures contribute to mitigating the effects of high inflation on household incomes. Finally, the Commission reports that the slowdown in the growth of real disposable incomes due to high inflation is mitigated by the measures taken by Greece to deal with the energy crisis, as well as the tax cuts that help to ease the tax burden on households.
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