Rehn addresses Parliament, confident 2011 budget can succeed

Addressing the Greek Parliament on Thursday, European Com-missioner for economic and monetary affairs Olli Rehn appeared confident that the Greek government’s 2011 budget was capable of reducing the public deficit by 2.5 percent of GDP so that no additional measures would be needed.

“Greece is on the proper course and on the right path, making great progress in a programme of fundamental reforms,” Rehn said while briefing the Greek Parliament committees on Econo-mic and European affairs.

The Commissioner also assured MPs that the repayment period for Greek loans will be extended without imposing any new terms, specifying that the discussion will take place on the basis of the existing memorandum to which an amendment will be added.

Rehn also predicted that market confidence in Greece might well be restored within the space of three years, so that the country could once again borrow on the markets from 2012 or 2013.

Defending the terms of the Memorandum, the Commissioner stressed that the medium and long-term goals of the package of measures was to allow growth and make Greece competitive. He noted that structural changes caused people to worry about the future when they had to be made rapidly and change habits but added that this was unavoidable at the current time.

Rehn emphasised the need to soon carry out reforms concerning labour, insurance and pension systems, saying that this would improve the environment for investment. While noting that significant progress had been made in several areas, he stressed that major challenges still remained, especially in overhauling the system for collecting taxes, fighting tax evasion and opening closed professions.

“Greece is not alone. It is making efforts and we are at its side,” he said, noting that the specific conjunction had accelerated the changes but that he was confident that Greeks would “seize the opportunities” and make use of them.

Interview

Meanwhile, in later press statements, Rehn expressed the European Commission’s full support to efforts made by Athens and the Greek government to get out of the crisis.

Rehn made the statements after meetings with Prime Minister George Papandreou, Finance Minister George Papaconstantinou and Bank of Greece (BoG) Governor George Provopoulos.

“Greece is not alone in its effort to get out of the crisis,” Rehn stated, adding that everybody in the EU should work as Europeans to limit the international market turbulence and help economic growth in Greece and in Europe.

“The European Commission welcomes the effort made by the Greek government to restructure the Greek economy,” he stated, adding that there is “determination on behalf of the Greek government to implement fiscal reform and reduce deficit. The reforms made are impressive and the Greek statistical figures are, at last, genuine and credible.”

“The efforts made in 2010 were much better than anticipated despite the fact that the initial target for the deficit is not feasible due to the revision and the limited revenues. The measures included in the 2011 budget correspond to 6 pct of the GDP and will allow a further deficit reduction,” Rehn stated. He underlined that Greece will see the end of the tunnel next year and economic growth will give positive signs in the beginning of the second half of 2012.

The European Commissioner underlined the need for more reforms in the sector of health, implementation of measures against tax evasion, restructuring of public utility companies and opening of the “closed-shop” professions. He ruled out the creation of a European Union of many speeds and stated that the European Council focuses on limited changes in the Treaty.

On the Euro-bond issue, he stated that the discussion on the issue is long and intense stressing that the Euro-bond is attractive as a thought.

Responding to a question concerning wage reductions in the private sector, he stated the EU supports the measures that will make it easier for the private sector to allow the Greek economy to become more competitive in terms of cost.

He stated that there is no need for a new loan and instead the EU is in favour of the extension of the repayment period.

“Early next year, a decision will be made to extend the repayment period to 7.5 years,” he said, ruling out the imposition of new terms and measures as a result of the repayment extension.

“The goal is to ensure equal treatment of the member-states,” he said, referring to the bailout loans for Greece and Ireland.

He also said that he is convinced that the economic reform programme will be effective and allow Greece to recover as soon as possible.