Optimism but also voluntarism by ECB on Program Countries' prospects to overcome the Economic Crisis

*Strasbourg/- In an unusual but official Text communicated to "EuroFora" by European Central Bank's (ECB) Press Service earlier Today, the nearby Frankfurt-based Institution of the €uroZone seems to estimate, in substance, that the current situation in the so-called "Program Countries", i.e. Greece, Portugal, and Ireland, is rather evolving quite Well in general, despite some reserves to be careful and catch up with any eventual delays on certain issues, sometimes Key to solutions. 

According to that ECB Document, which is its Reply to EU Parliament's Questionaire on the ECB/EU Commission/IMF "Troika", that MEPs are due to debate during next week's Plenary session in Strasbourg, "all countries under economic adjustment programmes have made very Significant Progress, in reducing their economic imbalances and addressing structural rigidities, .... (which) created the Basis for sustainable growth and employment creation", as it claims.

However, this has been done "at Differentiated speed", while also, for all of them,  "Economic policy outcomes are always subject to External factors and previously Unforeseen Events", so that some "Adjustments", for "3unexpected developments", might be needed, ECB warned.

    -  In particular, "between 2009 -2013, the Primary Fiscal Balance (Primary Budget Surplus, Loans' service excluded) .... is expected to improve by about 12 % of GDP in Greece, 8 % in Ireland, and 6 % in Portugal", according to ECB.

    But, already, "current projections" are that "Greece is expected to generate a small Primary Surplus already this year (2013), while Ireland and Portugal will achieve a primary surplus in  2014", (i.e. one Year later).   

     + In parallel, "unit Labour Costs relative to the €uro Area average Declined by about ...-17% in Greece,  -12% in Ireland, and -8% in Portugal.

    So that they "have ALL made good Progress in restoring Cost Competitiveness", .
which is key for boosting Exports', ECB points out. .

    "It is also good news for  competitiveness and purchasing power in these countries that Inflation has recently been very low"

    * However, it's "Ireland's current account (which) is already in Surplus since 2010", while "Portugal is projected to run a Current Accounts' Surplus in 2013", but "Greece's current account is expected to turn Positive" on 2014.

    * Similarly,  while "Ireland enjoys positive Growth since 2011", Economic Growth turned positive in Portuga since the 2nd Quarter of 2013", and "is expected to turn positive in Greece in 2014", ECB adds.

    + In addition, "Unemployment rate has been falling in Ireland and Portugal in the last few quarters", while "Ireland’s Exit from the programme is testimony of the Success of the economic adjustment Strategy", according to the ECB.
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    "However, important Challenges remain", and in particular the "Fiscal consolidation will need to continue to correct the excessive Fiscal Imbalances", with bigger Budget Primary Surplus, ECB warns.

    Because, otherwise, i.e. "without further improvements in the primary fiscal balances", the obvious Risk is that  "Debt Dynamics would remain a cause for Concern in several Countries", with "Adverse effects for sovereign Spreads and/or prospects for regaining Market access".

    Therefore, "Fiscal Consolidation", (f.ex. with further reduction of State Agents' Salaries/Pensions' service, etc, wherever necessary and possible), must not face  "further back loading", in order to avoid "undermininhg the Crezdibility of the Fiscal Strategy", ECB's paper advises in conclusion, inter alia.

F.ex., Greece "must continue its Structural Reforms and put an End to the Appointments" (of the notoriously surnumerary Cushy Job Holders and/or Political Lackeys scandalously hired in a Public Sector heavily indebted by former Governments' - mainly PASOK's- Clientelism and/or Nepotism), German Finance Minister Wolfgang Schäuble, has just pointed out, (See  relevant "EuroFora"s NewsReeport : http://www.eurofora.net/newsflashes/news/schaubleoneumedia.html ).

On this occasion, he also observed, by the way, that "it makes not sense to hold the IMF responsible for social problems", by "pushing the IMF out of the Troika", on the pretext that IMF would ask especially painful reforms  more frequently than EU Commission's representatives.

Probably because an adequate State Reform, (f.ex,  eventually combined also with a necessary Anti-Corruption purge, etc), would better Strengthen and Guarantee a much needed Sustainable character of Greece's recently obtained Primary Budget Surplus, (Comp. Supra).
   

At any case, it is useful to remind, on this occasion, that, in view of the EU's brand new Banking Union, ECB has reportedly agreed to systematically cooperate even more closely together with EU Parliament than before on a wide spectrum of topical issues, going well beyond the current "Troika" debate, while ECB's President Draghi has already started to be invited by EU Heads of States/Governments regularly at their relevant Summits in Brussels etc., as early as since December 2011, (Comp. "EuroFora"s NewsReports from Brussels then).

 (../..)