Considerations on COM(2012)116 - Amendment of Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit

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dossier COM(2012)116 - Amendment of Decision 2011/734/EU addressed to Greece with a view to reinforcing and deepening fiscal surveillance and ...
document COM(2012)116 EN
date March 13, 2012
 
table>(1)Article 136(1)(a) of the Treaty on the Functioning of the European Union (TFEU) foresees the possibility of adopting measures specific to the Member States whose currency is the euro with a view to strengthening the coordination and surveillance of their budgetary discipline.
(2)Article 126 TFEU establishes that Member States are to avoid excessive government deficits and sets out the excessive deficit procedure to that effect. The Stability and Growth Pact, which in its corrective arm implements the excessive deficit procedure, provides the framework supporting government policies for a prompt return to sound budgetary positions taking account of the economic situation.

(3)On 27 April 2009, the Council decided, in accordance with Article 104(6) of the Treaty establishing the European Community (TEC), that an excessive deficit existed in Greece.

(4)On 10 May 2010, the Council adopted Decision 2010/320/EU (1) addressed to Greece under Article 126(9) and Article 136 TFEU with a view to reinforcing and deepening the fiscal surveillance and giving notice to take measures for the deficit reduction judged necessary to remedy the situation of excessive deficit at the latest by 2014. The Council established 2014 as the deadline for correcting the situation of excessive deficit, and annual targets for the government deficit.

(5)Decision 2010/320/EU was substantially amended several times. Since further amendments were to be made, it was recast, on 12 July 2011, by Decision 2011/734/EU (2) in the interests of clarity.

(6)Economic activity in 2011-2014 is currently estimated and projected to be much weaker than had been expected when Decisions 2010/320/EU and 2011/734/EU were adopted. Economic activity is estimated to have contracted in 2011 by 6,9 %. Currently, the Commission forecasts the real Greek GDP to contract by 4,7 % in 2012, and to stagnate in 2013, before resuming growth of 2,5 % in 2014. In nominal terms, GDP contracted by 5,2 % in 2011, and is expected to contract by 5,4 % and 0,4 % in 2012 and 2013, respectively, before expanding by 2,5 % in 2014.

(7)In February 2012, the Greek government announced measures aimed at reducing the primary deficit in 2012, including the adoption of a supplementary budget. Extensive discussions on these measures have taken place between the Hellenic authorities and the Commission services. These discussions have considered not only the fiscal consolidation measures, but also the need to enhance the growth-friendly nature of these measures and to minimise any social impact.

(8)In March 2012, Greece launched and executed a debt exchange operation which substantially reduces the debt level and interest expenditure in 2012 and in the next years, and contributes to the sustainability of government debt.

(9)In the light of the above considerations, it appears appropriate to amend Decision 2011/734/EU in a number of respects, including the fiscal adjustment path, while keeping unchanged the deadline for the correction of the excessive deficit,