Responding to a report by the European Court of Auditors (ECA) on the three Greek bailout programmes, European Commissioner for Economic and Financial Affairs Pierre Moscovici underlined that the Commission will continue to support Greece in its efforts to bolster development, create jobs, and return to the markets on a viable basis.
Moscovici said that less than a year before the end of the current programme, Greece has fulfilled its commitments on reforms and is beginning to see the benefits. He noted that the economy is slowly beginning to grow again and unemployment is beginning to drop.
Among the positive developments he enumerated were the successful completion of the second evaluation, Greece’s exit from the EU’s excessive deficit procedure, and the slight further easing of capital controls a few days ago.
He maintained that given the above progress, a gradual return to the markets is a credible prospect for Greece.
For its part, the ECA report was extremely straightforward in outlining major errors by creditors in the design and implementation of the first two bailout memorandums and in the planning of the third one.
Borrowing still a challenge
As Greece readies for an eventual return to the markets, the ECA report underlines the difficulties of Greece meeting all of its borrowing needs through the markets.
It said that the interventions of the Commission in the bailout programmes contributed to the country’s reconstruction, but only marginally.
On the positive side, it said that Greece benefited from certain necessary reforms, and that the third bailout memorandum was clearly better than the previous two, especially in prioritising reforms.
The auditors conceded that the European Commission had no prior experience in such projects, that the terms of the programmes were not properly prioritised, and that there was no comprehensive, broader strategy for Greece.
ECB denies auditors data
The European Court of auditors attempted to assess the role of the European Central Bank in the bailout programmes, as the review of ECB management and effectiveness is within its remit.
The ECB, however, questioned the relevant mandate of the European auditors and did not provide the necessary evidence, and hence the role of the ECB was, amazingly, not examined in the report.
Baudilio Tome Muguruza, the ECA member from Spain who presented the report, said that the bailout programmes promoted reforms and limited the dangers of Greece not meeting its commitments. Still, he too conceded that Greece’s ability to fully meet its borrowing needs from the markets will be a difficult endeavour.
The report admits that the Commission did not conduct an exhaustive analysis of the first two bailout memorandums, even though that might have been helpful in revising and improving the reform process.
Still, the report says that in mid-2017, Greece continues to require external financial support, which means that the previous programmes proved unable to restore the country’s ability to finance its needs from markets, partly because of implementation problems.
The ECA auditors underlined that Greek GDP declined by over 25 percent and that the country did not return to a growth path in 2012, as had been erroneously projected.