Council Opinion of 31 January 2000 on the updated Convergence Programme of Greece, 1999 to 2002
C 60/4 EN Official Journal of the European Communities 2. 3. 2000 COUNCIL OPINION of 31 January 2000 on the updated convergence programme of Greece, 1999 to 2002 (2000/C 60/04) circumstances. convergence programme complies with the requirements of the Stability and Growth Pact. the updated In this sense, Considerable progress has been made over the past year in reducing price inflation; the deflator of private consumption exceeded marginally the projection of the 1998 programme in 1998, while no deviation is estimated for 1999 from the increase of 2,5 %; however, projected average rate of the increase in oil prices slowing down the process of is disinflation at present. the high in the considers that within growth The Council environment projected convergence programme, particular effort must be made by Greece to ensure that the progress made towards disinflation acquires a lasting character; such an effort seems to be all the more necessary in view of the convergence of monetary conditions in Greece to those prevailing in the euro zone and the potential implications of such a development on demand and prices; in this context, the Council welcomes the revaluation of the central rate of the Greek drachma as from 17 January 2000 which will support the authorities in their efforts to further reduce inflation in Greece; to reinforce the anti-inflationary stance of the policy instruments at its disposal, including budgetary and incomes policies; the wage agreements in 2000 in both public and private sectors and the cooperation of all social partners are essential to secure an environment of low-inflation. As regards budgetary policy, the budgetary targets set in the programme are considered by the Council as a minimum and the Greek authorities are invited to do their best to achieve better outcomes than planned; in addition, the Council considers that the Greek auth- orities must be ready to tighten fiscal policy further from 2001 if inflation pressures emerge. the Greek Government the Council invites The Council acknowledges that considerable progress has been made in recent period in Greece in introducing structural reforms, namely in the functioning of the wider public sector; it invites the Greek government to continue decisively in this direction by accelerating the pace of the necessary reforms with a view to enhancing competitive conditions and the good operation of labour, goods and capital markets; such reforms are necessary both in order to enhance the productive potential of the economy and to reduce inflationary pressures. 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 coordination of economic policies (1), and in particular Article 9(3) thereof, Having regard to the recommendation of the Commission, After consulting the Economic and Financial Committee, HAS DELIVERED THIS OPINION: On 31 January 2000 the Council examined the 1999 update of the convergence programme of Greece which covers the period 1999 to 2002. The Council notes that the 1999 update maintains as a central objective the compliance with the convergence criteria which will allow Greece to participate in monetary union from January 2001. The budgetary and structural policies outlined in compliance with the 1999 Broad Economic Policy Guidelines. in the programme are the Council satisfaction notes with significant The improvement in public finances in recent years. Developments over the past year indicate that the budgetary target set in the 1998 convergence programme has been met: the general Government deficit is estimated at 1,5 % at the end of 1999, 0,6 % of GDP lower than projected in the 1998 programme; the debt ratio was reduced by 1,2 percentage points to 104,2 % of GDP. for GDP The updated programme is based on macroeconomic projections showing strong investment-led growth and medi- um-term price stability. The 1999 update, building on the and on good budgetary consolidation achieved so far prospects general Government deficit to turn to a surplus of 0,2 % of GDP in 2002. The debt ratio is projected to fall to 98,0 % of GDP in 2002. The Council considers that the underlying budgetary position of the general Government provides an adequate safety margin in the course of the programme to prevent the deficit from breaching the 3 % of GDP threshold in normal is projecting growth, the (1) OJ L 209, 2. 8. 1997, p. 1