Greece passed the test of the fifth post-bailout assessment on Wednesday as the European Comission hailed the country’s progress on reforms and its fiscal position, although concerns remain on the nonperforming loans front.

The Commission’s post-program surveillance report said that Greece’s fiscal and economic prospects have improved and the country is once again projected to exceed the primary budget surplus target of 3.5% of gross domestic product. However, it notes that the planned easing of policy this year (on the solidarity levy, the Single Property Tax – ENFIA and social security contributions) may put off the gradual reduction of the corporate tax to 20%.

In a statement to Ekathimerini, Commission Vice President Valdis Dombrovskis said Greece has generally achieved good progress in fulfilling its reform pledges. However, he did express concern regarding bad loans: «Greece continues to have by far the biggest ratio of NPL in the EU,» he said, adding that Brussels supports the Hercules asset protection scheme aimed at reducing the stock of NPLs, but «it is important to avert the creation of new NPLs.» To achieve that, he noted, Greece needs the appropriate legal framework on bankruptcy and on imposing the terms of loan contracts.

The Latvian official stressed that there is still a problem with strategic defaulters that has to be tackled, and that the very high rate of bad loans is preventing banks from issuing credit to the real economy.

Original story: Ekathimerini | Yannis Palaiologos
Photo: Photo by Jonte Remos for FreeImages.com
Edition: Prime Yield