Schaeuble: Greece needs to have a competitive economy and sustainable growth

Greece needs to have a competitive economy and sustainable growth, German Finance Wolfgang Schaeuble said as he was leaving the ECOFIN meeting in Brussels on Tuesday. Commenting on the decisions reached at Monday’s Eurogroup meeting on Greece, he noted that the discussion had not lasted long but had made progress, so that “we have now reached a good point.”

“There is now an agreement between the institutions and the Greek government on the framework of the negotiations that will continue, so that they can return to Athens,” he said.

Regarding press reports highlighting a shift in emphasis from austerity to reforms in Greece, Schaeuble said that he “failed to understand this.”

“All the programmes stipulate that, in order to regain access to the markets, the countries must use the time to become competitive through reforms and enter – including Greece – a sustainable path of growth,” he pointed out. He stressed that competitiveness has always been a key element and that there was now a broader consensus on this
“rather than somewhat abstract calculations on the sustainability of the debt in the 21st century.”

The German finance minister said the talks in Athens will be based on the existing agreements made last May, which provided for the IMF’s participation after a successful conclusion of the second review, as well as a primary surplus target of 3.5 pct of GDP in 2018 and in the “medium-term” – though the meaning of this has not yet been precisely specified.

“We agreed with the institutions and the Greek government, on an initial level, what are the necessary structural and fiscal reforms,” he said. “We also agreed to find a way to make the corresponding corrections, depending on the real performance of the Greek economy, given the different projections on how this will go, since the Greek government considers that the IMF projections are always a little more pessimistic than the reality,” he added.

The hurdle overcome at Monday’s Eurogroup, the German minister explained, was that the IMF had now agreed that the measures did not have to be voted by the Greek Parliament immediately. An agreement was reached that the measures legislated now would not go into effect right away but be provisional depending on the real economic performance in the coming years, he said.

“We have not reached the end. The work will continue and will be difficult,” Schaueble added, highlighting the contribution of Eurogroup President Jeroen Dijsselbloem in “making all this understood by Greek public opinion and especially by the Greek Parliament, so it can take the appropriate decisions.”