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Greece due to return to growth in 2011: EU official
Date: 2010/12/13 Click: 1628
Greek economy is on the right track to return to growth in 2011, making impressive progress on fiscal adjustment and structural reforms over the past six months, said European Commissioner of Economic and Monetary Affairs Olli Rehn on Thursday during a visit to Athens.

The eurozone in the mean time faces the threat of obstacles to the path of economic recovery due to the ongoing turbulence in the

financial markets, added Rehn speaking in a press conference at the end of a series of meetings with Greek officials.

"The main challenge today is to contain this turbulence in the financial markets which threatens to harm the economic recovery in the eurozone," he stressed, noting that he sees no prospect of a divided EU in the short future due to economic imbalances.

"No, these scenarios do not sound realistic," he said replying to a question. In order to guarantee a common future of prosperity for current member countries European partners work hard at the moment on the creation of a permanent crisis resolution mechanism, he added.

"We are all on the same boat in Europe. We need a comprehensive system to address such challenges which combines European and national efforts," Rehn stressed.

In regards to the Greek exit plan from the crisis, which was the main subject during Thursday's talks with Greek officials, the EU Commissioner repeatedly expressed admiration on what has been achieved so far and optimism on the final outcome.

Greece faced the danger of default this spring due to a budget deficit that reached 15.4 percent of GDP in 2009. The eurozone member country avoided the default by securing a multi-billion euro rescue package from EU and International Monetary Fund (IMF) over a three-year period, pledging painful austerity measures and reforms.

On the first part the latest figures show major steps in the right direction, but Greece still lags on the implementation of structural reforms.

Forecasting that Greeks could see "light in the end of the tunnel in the second half of 2011," returning on the road of growth, Rehn suggested concentration on key reforms.

During a meeting with Greek Prime Minister George Papandreou and during a speech at the Greek parliamentary Economic Affairs committee, he repeatedly raised attention to necessary drastic changes in the labor market, the healthcare system, the liberalization of restricted professions, the restructuring of loss-making state enterprises and the fight against tax evasion to boost investments.

Commenting on strong reactions by Greek citizens on this wave of austerity measures and structural reforms, he said that he understands the anxiety of people about the future when they are called to change habits overnight, but "whether we like it or not, it is an inevitable element in our times."

Still objecting to cutbacks on wages, pensions, tax hikes and reforms members of a Left labor union staged one more protest in the center of Athens on Thursday afternoon, denouncing Greek government policies and Rehn's suggestions.

Asked whether Greece will need a new loan to overcome the crisis after 2013, Rehn said categorically that he sees no such need if the program will be fully implemented without time wasting.

He expressed confidence that the option of extending the repayment period of the EU-IMF loans for Greece to 2021 instead of 2016 under the initial agreement in May, will erase all doubts in markets whether Greece will be able to pay back all loans.

The decision on that extension will be discussed at the Council of Finance Ministers early next year, with a positive recommendation of the European Commission, he said.
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