EU Says Greece Met Targets, Paves Way for More Debt-Relief

Sotiris Nikas and Paul Tugwell
·2 min read

(Bloomberg) -- Greece has taken the necessary actions to fulfill its commitments following the post-bailout era, the European Union said Tuesday, paving the way for the disbursement of the final debt-relief measures agreed for the country in 2018.

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The EU’s executive arm published its first report for Greece after the country exited the so-called enhanced surveillance status in August, and said the document “could serve as a basis for the Eurogroup to decide on the release of a final tranche of policy-contingent debt measures agreed in June 2018.”

Measures also include a permanent reduction of the step-up interest margin as of 2023 until 2049, with an undiscounted value of 5.2 billion euros ($5.35 billion), EU said. The euro-area finance minister’s meeting in December will decide whether to approve the final tranche of these measures.

The updated debt sustainability analysis delivers a marked improvement in the short and medium term compared to the last update, but no major changes in the long term, the Commission said. Public debt is now expected to fall to 118% of GDP in 2032.

The Greek economy continued to recover at a solid pace in the first half of 2022, but it’s expected to slow down in the coming quarters as a consequence of the energy crisis and the ensuing inflationary shock, the EU said.

The report also says that Greece has delivered on its commitments across various areas and mainly on fiscal policy, tax administration, justice, financial sector reforms and privatization.

But further steps are needed to fully achieve the targets of primary health-care reform and the labor law codification, as well as the clearance of arrears and backlogs related to the functioning of the financial sector.

(Updates with details on debt-relief measures from third paragraph.)

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