NEWS Release - Klaus Regling, Managing Director, ESM The Greek programme The Economist’s 20th Roundtable with the Government of Greece Athens, 22 June 2016
Ladies and gentlemen, The timing of this conference is fortuitous. Just yesterday, the ESM disbursed €7.5 billion to Greece.
It was the bulk of the second tranche in the third financial assistance programme. The total second tranche is worth €10.3 billion. The remainder of the money will be available when Greece meets further milestones, and after clearing some domestic arrears. This is an important moment both for Greece and for Europe.
It is a recognition that Greece is making progress in modernising its economy. It also shows that Europe will not leave Greece alone. Greece is part of the European family. Europe has shown financial solidarity time and again. And we will continue to do so, if needed. In my remarks today, I will briefly highlight both sides of the relation: Greece and Europe. Starting with Greece. The latest disbursement came after completing the first review. That is positive. But there were long delays. It took much longer to conclude the review than expected: nine months instead of three. Such delays are a drag on the economy.
They hold up the reforms. And the long negotiations also caused an accumulation of domestic arrears, which pose another burden on the Greek economy. The second review is coming up in autumn. It is good to be reminded that such talks should not take too long. Greece needs stronger ownership of the adjustment programmes. But let me now turn to the positive. I will list some of the main achievements in Greece. From my perspective Greece worked hard, with Europe. And that was not easy for the population.
In pension reform, it is good to see that the eligibility criteria for early retirement have been streamlined. There has also been a rationalisation of the various pension funds. This will help to bring current and future pension expenditure back to sustainable levels. In reforming the public administration, there has been good progress in making the public sector more efficient. Wages and benefits had to be reduced because they had increased too rapidly until 2009. There has also been important reform of the personal income tax system, which has made the system more efficient, and which aims to broaden the tax base.
And finally, despite initial delays, we have seen crucial progress in the area of privatisations. This should make the economy more efficient and generate revenue to reduce debt. Examples are the sale of Piraeus, the Athens port and of the regional airports. Also, a privatisation fund is now being created, which will start operating soon. I recognize that this is an impressive list. Reforming an economy to this degree is a daunting exercise. The OECD and World Bank recognize that Greece has implemented more reforms during the last five years than any other country (though coming from a low level).
page source http://www.esm.europa.eu/
