Greece Concludes European Stability Mechanism (ESM) Support Program

Greece has successfully concluded a three year European Stability Mechanism (ESM) stability support program with its place at the heart of the euro area and European Union secured, the European Commission said Monday.

The successful conclusion of the program is a testament to the efforts of the Greek people, the country’s commitment to reform, and the solidarity of its European partners, the Commission said in a statement. Greece has benefited from financial assistance from its European partners since 2010. The Greek authorities requested a new ESM stability support program on July 8, 2015. The European Commission signed, on behalf of the ESM, a Memorandum of Understanding for a three year stability support program on August 20, 2015.

European Commission President Jean-Claude Juncker said: “The conclusion of the stability support program marks an important moment for Greece and Europe. While their European partners have demonstrated their solidarity, the Greek people have responded to every challenge with a characteristic courage and determination. I have always fought for Greece to remain at the heart of Europe. As the Greek people begin a new chapter in their storied history, they will always find in me an ally, a partner and a friend.”

According to Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, “The conclusion of the stability support programme is good news for both Greece and the euro area. For Greece and its people, it marks the beginning of a new chapter after eight particularly difficult years. For the euro area, it draws a symbolic line under an existential crisis. The extensive reforms Greece has carried out have laid the ground for a sustainable recovery: this must be nurtured and maintained to enable the Greek people to reap the benefits of their efforts and sacrifices. Europe will continue to stand by Greece’s side.”

A total of €61.9 billion in loans have been provided to Greece under this stability support program on the basis of implementation of a comprehensive and unprecedented reform package. This stability support program took a coordinated approach to tackle long-standing and deep-rooted structural issues that contributed to Greece experiencing an economic crisis.

The Commission said Greece has taken measures to ensure its fiscal sustainability, bringing the general government balance from a significant deficit to surplus in 2017, which is projected to be maintained. These reform measures and consolidation efforts will have cumulative effects over time, and will thus continue to positively impact fiscal sustainability well beyond the conclusion of the program.

The financial sector is now in a much stronger position as a result of successful recapitalization operations, an overhaul of bank governance, and work to implement a strategy to reduce non-performing loans, which must be sustained, the Commission said.

The efficiency and efficacy of the public administration has been improved including through the introduction of new rules on the appointment, assessment and mobility of public sector employees; the establishment of the Independent Authority for Public Revenue; and measures to make the judicial system more efficient.

Finally, important structural measures have been put in place to improve Greece’s business environment and competitiveness to make Greece an attractive destination for investment and allow businesses already in place to expand, innovate and create jobs; as well as to establish sustainable and universal pensions, health care and social benefit systems, including a guaranteed minimum income scheme.

When taken together, these transformative reforms have laid the foundations for a sustainable recovery, putting in place the fundamental conditions needed for sustained growth, job creation and sound public finances in the years to come, the Commission said.

Improving economic indicators confirm that while work remains to be done, the efforts undertaken are already delivering tangible benefits by restoring order to public finances, reducing unemployment, and securing a return to growth. Economic growth has rebounded from -5.5% in 2010 to 1.4% in 2017 and is expected to remain around 2% in 2018 and 2019. The fiscal balance has progressed from a massive deficit of 15.1% in 2009 to a 0.8% surplus in 2017 (corresponding to a primary surplus of 4.2% in programme terms). Although unemployment remains unacceptably high, according to figures recently released by the Hellenic Statistical Authority, unemployment fell to 19.5% in May 2018, reaching a level below 20% for the first time since September 2011.

Greece will be fully integrated into the European Semester of economic and social policy coordination to help ensure that the country and its people reap the full benefits of the efforts undertaken in recent years. In the post-program period, the completion, delivery and continued implementation of reforms agreed under the program will also be monitored through an enhanced surveillance framework.

The Commission’s Structural Reform Support Service will continue to assist the Greek authorities, upon their request, in the design and implementation of growth-enhancing reforms.