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13 March 2012

Greece: Decision paves way for next disbursement


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The European Council adopted a decision adjusting fiscal consolidation measures required of Greece under the EU's excessive deficit procedure, following an agreement reached between the Greek government and the Troika.


The decision paves the way for the disbursement of financial assistance under the second economic adjustment programme for Greece, enabling the Commission to sign a memorandum of understanding, on behalf of the Member States, establishing the conditions for that assistance. The first disbursement must be made available before Greece's next payment obligations fall due on 20 March.

The new programme is aimed at putting Greece's public debt ratio on a downward path reaching 120.5 per cent of GDP by 2020. Provided policy conditionality is met on an on-going basis, it will be financed until 2014 to a maximum of €130 billion by the European Financial Stability Facility and the IMF. The programme will be accompanied by strengthened monitoring of the implementation of reforms in Greece.

The decision adopted  maintains the 2014 deadline set for bringing Greece's government deficit below the EU's reference value of 3 per cent of GDP. Amending decision 2011/734/EU, it adjusts the annual adjustment path set for achieving this target and the annual change that will be required in consolidated gross debt, as well as the timetable set for taking specific measures. Greece must report on a quarterly basis on measures taken.

More specifically, the decision calls for a primary deficit (i.e. excluding interest expenditure) not exceeding 1 per cent of GDP in 2012, and primary surpluses of at least 1.8 per cent of GDP in 2013 and 4.5 per cent of GDP in 2014. Following the debt exchange, these targets are consistent with overall deficit targets of 7.3 per cent of GDP in 2012, 4.7 per cent of GDP in 2013 and 2.2 per cent of GDP in 2014.

On 9 March, the Eurogroup confirmed that the necessary conditions are in place to launch the procedures required for approval of the EFSF's contribution to the financing of the second adjustment programme for Greece.

Press release



© European Council


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