Economic adjustment programmes achieved only ‘limited’ Greek recovery, report says




The economic adjustment programmes agreed for Greece after the financial crisis broke out failed to bring about its full recovery, despite providing short-term financial stability and making some progress on reform possible, according to a new report from the European Court of Auditors released on Thursday.

The programmes only helped Greece recover to a limited extent, the report said, and had not succeeded in restoring the country’s ability to finance its needs on the markets, as of mid-2017. The first economic adjustment programme was for 110 billion euros in 2010, with two further programmes for 172.6 billion euros in 2012 and 86 billion in 2015.

The programmes aimed to establish a stable economic situation in Greece by covering the economy’s financing needs in return for wide-ranging structural reforms, thereby preventing contagion across the rest of the euro area.
These programmes promoted reform and avoided default by Greece. But the country’s ability to finance itself fully on the financial markets remains a challenge, said Baudilio Tom Muguruza, the Member of the European Court of Auditors responsible for the report.

The auditors found that the Commission had no prior experience in managing such a process, and that the programmes’ conditions were neither sufficiently prioritised by importance nor embedded in a broader strategy for Greece. Furthermore, the programmes macro-economic assumptions were poorly justified. Cooperation with other institutions was effective but informal.

The Commission’s compliance monitoring in relation to Greece’s implementation of the programmes was sound. The auditors also found a mixed picture in the design and implementation of reforms in four crucial policy fields: taxation, public administration, the labour market and the financial sector. Reforms to taxation and public administration brought fiscal savings, but the implementation of structural components was much weaker. The financial sector was substantially restructured, but at a considerable cost. Overall, the auditors found that the specific objectives of the programmes had been achieved.

ANA-MPA

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