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Anastasia Balezdrova

The fiscal consolidation programme has failed to stabilize the Greek economy, reads the latest European Commission report on it its progress, which was released in Brussels today.

According to a senior official of the European Union, who presented its results, this has created the basis for economic growth which is expected to be around 0.6% in 2014, 2.9% in 2015 and 3.7% in 2016. At the same time, he said unemployment is about to begin to decline this year and, according to Brussels, Greece is already creating new jobs.

The European official stressed that Athens has been able to achieve impressive results in terms of fiscal consolidation since it has more than fulfilled the objectives for 2013 with a budget surplus of 1.5 billion euro (0.8% of GDP).

He also pointed out that the Greek banks are stable and after being successfully recapitalised, the majority of them are already turning to private capital. In this connection, he stated that the money provided for that purpose by the European mechanism for financial support will probably not be used but in all cases, it will remain there and not be used for other purposes. At the same time, he said that the high percentage of non-performing loans has emerged as a serious problem and added that the Bank of Greece should be ready to cover the probable capital requirements of the financial institutions.

European Commission spokesman Simon O'Connor presented the report on the Greek economy

The European official said that Greece has been successful in the fight against corruption as well as in terms of privatization and structural reforms, noting at the same time that their progress is slow because of the reactions on the part of the established corporate interests. This is the main reason why the European Commission continues to doubt the programme implementation. He however expressed his belief that the reforms will be implemented in the coming months.

According to Brussels, the sustainability of the Greek public debt is secured and it expects it to reach 125% of GDP in 2020 and 112% in 2022. The European Commission representative stressed that the debt had not been the subject of discussion during the last visit of the supervisory Troika to Athens. "At the meeting of the Finance Ministers of the Eurogroup member states we decided to consider this issue after the next report on the progress of the Greek programme," he said, adding that the situation could change if in the mean time Greece decided to issue new government bonds.

In terms of the next tranches of economic aid to Athens, he said that 6.3 billion euro will be allocated on 28 April and another 2 billion euro in June and July.

The European official did not spare the Greek politicians from criticism for their position especially in the first years of the implementation of the memorandum, saying, "We would prefer them to have done what they should have done in connection with the programme instead of opposing it and blaming Brussels". He rejected the view that the severe crisis in Greece is the result of the implementation of the programme. "It is due to the fiscal consolidation that had to take place anyway. I have not met a person in Greece who does not recognize the fact that the country needed this change, whether he agrees with the memorandum or not."

In conclusion, he said that the decision on whether the memorandum will be completed late this year or if it will be extended after it is to be taken in the autumn. "But even if it is completed, this does not mean that the visits and inspections by expert delegations, which will follow the implementation of the reforms, will stop," he said.