The European Commission (EC) approved the release of a new tranche of debt relief measures agreed to as part of Greece’s post-bailout program after it successfully implemented reform commitments despite the extraordinary circumstances posed by the coronavirus (Covid-19) outbreak.
In its 6th enhanced surveillance report – agreed to when the country exited its last bailout in August 2018 – the EC acknowledged that Greece reacted promptly and managed to successfully deal with the Covid-19 crisis in a “responsible way”, noting however that tourism and shipping will be among the country’s hardest hit sectors.
“I expect this report to pave the way for a positive decision by the Eurogroup on the next tranche of debt relief measures worth 748 million euros,” said EU Economics Commissioner Paolo Gentiloni.
In view of the Covid-19 crisis, the report goes on to underline that Greece is set for recession despite adjusting policies to support households and businesses, retain jobs, and improve health care.
At the same time, it adds that the country will benefit from EU support and from tapping into a European Central Bank (ECB) 750-billion-euro Pandemic Emergency Purchase Program, which will include Greek sovereign bonds.
Greece is also set to benefit from the SURE scheme passed yesterday.
On a final note, and provided that containment measures are gradually lifted starting mid-May, the EC estimates that Greece’s real GDP will drop by about 10 percent this year but projects a strong recovery in 2021.
Policy measures, it says, are expected to cushion the depth of the recession and buttress a marked rebound in GDP in 2021.