29 July 2013

DG ECFIN report: The Second Economic Adjustment Programme for Greece – Third Review July 2013

The report examines current macro-economic, financial and fiscal developments  and assesses compliance with programme conditionality.

The document contains in annex the following updated programme documents:

• the Memorandum of Economic and Financial Policies (MEFP)
• the Memorandum of Understanding on Specific Economic Policy Conditionality (MoU)
• the Technical Memorandum of Understanding (TMU).

Greece continues to make overall, albeit often slow, progress under the Second Economic Adjustment Programme, with several important actions being delayed. Important progress has been made on public finances and the recapitalisation of the four core banks has been completed.

Implementation risks to the programme remain important. The key risks concern the government’s perseverance in confronting vested interests. Moreover, the recovery of the economy is still facing the headwinds of the pronounced fiscal consolidation in 2013 and weak economic growth in the euro area. However, there are also some upside risks. In particular, sustained strong policy implementation can help lift uncertainty and prompt a faster return of investment, notably foreign. There could also be a somewhat stronger impact from the liquidity injection expected from the clearance of government arrears, public works programmes, and from a more dynamic tourist season.

On the basis of this analysis of compliance with the Memorandum of Understanding (MoU), and conditional on continued implementation by the Greek authorities of the revised MoU, notably of the prior actions, the programme is now broadly on track and the Commission services recommend disbursement of the tranche for Q3 2013 of EFSF funds under the second programme.

Summary

Full report

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