The Greek debt can remain sustainable in the future by maintaining the momentum that exists for the reforms and the implementation of the Recovery Plan, said the EU Commissioner for Economy, Paolo Gentiloni, speaking at the 7th Delphi Economic Forum.
The Commissioner added that this will be the basis for ensuring the successful exit of Greece from the enhanced supervision regime this year, the decision for which will be taken in June.
THE Mr. Gentiloni He stressed that the Greek debt is sustainable and there are several factors that limit the risk, such as its long repayment period and the low cost of financing supported by the European Central Bank.
Asked when Greece is expected to acquire the investment grade for the bonds it issues, he noted that there have been positive developments in recent years. For the immediate future, he said, it is difficult to make predictions as inflation and war create new problems, but overall the path to this very important goal is clear.
Referring to the effects of the war on the European economy, the Commissioner said that it is difficult to make an accurate assessment today as they, as he stressed, will depend on the duration of the war, the possibility of extending sanctions against Russia and oil. or gas as well as the evolution of inflation, which is of course linked to the issue of sanctions.
It referred to the rise in inflation in the Eurozone to 7.5% in March, with peak energy prices rising 44.7% year-on-year. For growth, which was projected at 4% for the EU before the war, the Commissioner said a much lower rate should be expected.
On the problems that could arise from the European economy’s dependence on Russian energy, Gentiloni said it would be a positive development as it would be combined with the EU’s goal of a green transition. He noted, however, that the cost to the EU would be higher if the detoxification process took place within a few weeks due to new sanctions on Russian energy.
For the EU banking union, he noted that now is the time to make substantial progress in this direction, so that Europe has a strong banking system. It’s the right time, he said, to bridge the differences between member states, something that Eurogroup leader Pascal Donahue is working on.
Regarding the Stability and Growth Pact, the Commissioner said that significant changes are needed, so that the debt reduction is done in a more gradual and development-friendly way and there is more room for public investment. He noted that there was progress in this direction, citing the joint proposal presented by Spain and the Netherlands, two countries that had different positions on this issue.
For countries with high debt, such as Greece and Italy, he said, there could be fiscal space with the implementation of the recovery plan. This, he stressed, will be the first step, while he added that there must be the right balance between having a fiscal space to increase investment and avoiding large increases in current spending.
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