Updated stability programme of Greece, 2005-2008 - Main contents
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official title
Council Opinion of 14 March 2006 on the updated stability programme of Greece, 2005-2008| Legal instrument | Opinion |
|---|---|
| Original proposal | SEC(2006)229 |
| CELEX number i | 32006A0405(01) |
| Document | 14-03-2006 |
|---|---|
| Publication in Official Journal | 05-04-2006; OJ C 82 p. 1-5 |
| End of validity | 31-12-9999 |
5.4.2006 |
EN |
Official Journal of the European Union |
C 82/1 |
COUNCIL OPINION
of 14 March 2006
on the updated stability programme of Greece, 2005-2008
(2006/C 82/01)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(3) thereof,
Having regard to the recommendation of the Commission,
After consulting the Economic and Financial Committee,
HAS DELIVERED THIS OPINION:
(1) |
On 14 March 2006, the Council examined the updated stability programme of Greece, which covers the period 2005 to 2008. |
(2) |
Over the last decade, driven by robust productivity growth, real GDP growth in Greece averaged 3,5 % and was among the highest in the EU. Sustained robust growth has led to strong real convergence, accompanied by a dramatic fall in HICP inflation, which nevertheless remains well above the EU average, and by rising external imbalances. The general government deficit, in spite of high growth, remained on average well above 5 % of GDP and attained 6,6 % of GDP in 2004. Together with large below-the-line operations, it contributed to the accumulation of public debt which remained close to or above 110 % of GDP during the last ten years. |
(3) |
On 5 July 2004, the Council decided that Greece was in excessive deficit. On 17 February 2005, the Council decided to give notice to Greece, in accordance with Article 104(9) to correct the excessive deficit by 2006. The Commission services' autumn 2004 forecast underlying this decision expected the deficit to reach 5,5 % of GDP in 2004. In its opinion of 6 April 2005 on the March 2005 revised updated stability programme, covering the period 2004-2007, the Council invited Greece to implement permanent measures to correct the excessive deficit by 2006 at the latest, reduce the cyclically-adjusted deficit by at least 0,5 % of GDP from 2007 onward, ensure a faster debt reduction path, implement the enacted pension reforms to ensure the sustainability of public finances, and further improve the collection and processing of general government data. |
(4) |
The update estimates the 2005 deficit at 4,3 % of GDP (2), which compares with an estimate of 3,7 % of GDP in the Commission services' autumn forecast and in the previous update. The difference with the latter mainly reflects carry-over effects of the September 2005 revisions of 2002-2004 deficit outcomes, notably leading to a revised 2004 deficit of 6,6 % of GDP, while the Commission services' autumn 2005 forecasts included one-off revenues from an announced securitisation operation, which has not taken place. |
(5) |
The update was submitted on 21 December 2005, three weeks later than the deadline specified in the new Code of Conduct on the content and format of stability and convergence programmes. The new programme broadly follows the model structure and data provision requirements for stability and convergence programmes specified in the new Code of Conduct (3). |
(6) |
The macroeconomic scenario underlying the programme expects real GDP growth will pick up from 3,6 % in 2005 to 3,9 % on average over the rest of the programme period. Assessed against currently available information, this scenario appears to be based on favourable growth assumptions, with the projected evolution of growth in the medium term appears to be on the high side, implying a relatively high estimate of the potential output growth. The programme's projections for inflation appear realistic. |
(7) |
The update's budgetary strategy aims at reducing the deficit below the 3 % of GDP threshold by 2006, in compliance with the... |
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