The Greek and the European Union flags flutter in front of Maximos Mansion at the Prime Minister offices, in Athens, Greece.  Picture: REUTERS
The Greek and the European Union flags flutter in front of Maximos Mansion at the Prime Minister offices, in Athens, Greece. Picture: REUTERS

Brussels — Greece’s fiscal position has improved and the EU should end disciplinary procedures against it over its excessive deficit, the EU Commission said on Wednesday, paving the way for the country to return to international bond markets.

EU fiscal rules oblige member states to keep their budget deficits below 3% of their economic output or face sanctions that could entail hefty fines, although so far no country has received a financial penalty.

Greece recorded a 0.7% surplus last year and is expected to have a deficit of only 1.2% in 2017. "Our recommendation to close the excessive deficit procedure for Greece is another positive signal of financial stability and economic recovery in the country," commission vice-president Valdis Dombrovskis said in a statement.

Ending the procedure — a step that must still be confirmed by EU states — would further reduce the pressure on Athens after eurozone creditors unblocked new loans to it worth ¤8.5bn ($9.6bn) last week as part of its ¤86bn bailout programme.

The move, which was widely expected, should help Greece in issuing new bonds in the coming weeks or months. With the exception of two bonds in 2014, Athens has been absent from the markets since the start of the eurozone debt crisis in 2009.

The Greek economy is expected to grow 2.1% this year, above the eurozone average, according to commission forecasts, although its unemployment rate remains the highest in the EU at 21.7% in April.

Returning to the markets would help Greece smoothly end its latest bailout programme, the third since 2010, which is due to end in August 2018. Eurozone creditors are encouraging Greece to test the markets before the conclusion of the financial aid programme. Investors and bankers told Reuters on Tuesday that Greece could return to markets in the next few weeks.

As the bloc’s economy is firmly on a recovery path, only France, Spain and Britain remain under the fiscal disciplinary procedure for their excessive deficit. The French government has reassured Brussels of its intention to bring its deficit below 3% of output from 3.4% last year.

Reuters

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