COUNCIL OPINION of 12 October 1998 on the Convergence Programme of Greece, 1998-2001
C 372/2 EN Official Journal of the European Communities 2. 12. 98 COUNCIL OPINION of 12 October 1998 on the Convergence Programme of Greece, 1998Ü2001 (98/C 372/02) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordiÜ nation of economic policiesØ(˛), and in particular Article 9(1) and (2) thereof, Having Commission, regard to the recommendation of the After consulting the Monetary Committee, HAS DELIVERED THIS OPINION: On 12 October the Council examined the Convergence the period for Greece which covers programme 1998Ü2001. The Council notes with satisfaction that the primary objective of the programme is the fulfilment by Greece of the conditions allowing for a full participation in the EuroÜarea from 1 January 2001. The Council the therefore considers appropriate programme on disinflation and budgetary consolidation. Moreover, the Council considers that the programme is consistent with the Broad Economic Policy Guidelines. focus of the The programme is built upon a marco economic forecast showing strong investment led real growth coupled with declining inflation which is expected to be underpinned by lasting wage moderation and fiscal adjustment. The Council notes that securing high growth together with disinflation requires, inter alia, o good performance of the supply side of the Greek economy. if inflation Wage developments are crucial is to be brought down on a durable basis. The Council welcomes the wage agreement covering 1998Ü99 and urges all those involved to implement it rigorously. The Council emphasises the need to strengthen wage moderation for the following years of the programme on the basis of the programme’s targets for inflation. The Council considers that the Greek Government should be ready to take the necessary measures to secure durable progress in disÜ inflation. (˛) OJ L 209, 2. 8. 1997, p. 1. The Council commends the programme’s strategy of bringing about the reduction of the deficit to 0,8Ø% of GDP in 2001 through the containment of primary current expenditure, thus allowing for a rising level of Government investment. In this context the Council considered that the definition of an ex ante and binding norm for the control of primary current expenditure would have been welcome. In the short term, the Council urges the Greek Government to achieve the 2,4Ø% of GDP target for the general Government deficit in 1998. The Council notes that the Government gross debt ratio is still very high in Greece and that it is important to secure that during the programme period the reduction of the deficit in the reduction of the debt than was the case up to now. Moreover, greater use should be made of privatisation receipts to reduce the Government debt. is reflected to a larger extent The Council welcomes the structural reforms included in the programme which are geared towards the labour market, the social security system and the wider public sector. The Council urges the Greek Government to implement them as scheduled and pursue further the reform effort in order to enhance the potential and effiÜ ciency of the Greek economy. to take its targets, even The underlying budgetary position corresponding to the deficit target of 0,8Ø% of GDP in 2001 provides a safety margin against breaching the 3Ø% of GDP threshold as a result of normal cyclical fluctuations. In this sense, the programme is an important step in the direction of the requirements of the Stability and Growth Pact. The Council urges the Greek Government ot implement the the necessary programme vigorously and if the macroÜ measures to achieve less favourable. This would economic environment represent fiscal imbalances which have for long been a feature of the Greek economy. The Council notes that, after the convergence programme has been submitted, the Greek intention to target a government has announced less general government deficit which the than for 1999. A programme’s fiscal the significant reinforcement of adjustment, if confirmed through the whole period of the programme, would be most welcome to the Council. is target of 2,1Ø% GDP is impressive correction of the pace of the an its