UPDATE 1-EU says Greece reforms broadly on track

* EU report: good progress on fiscal consolidation

* Healthcare sector, public firms cause concern

* Inflation points to lack of competition in Greece

(Updates with details, background)

By Marcin Grajewski

BRUSSELS, July 7 (BestGrowthStock) – Economic reforms intended to
pull Greece out of recession and help it resolve a sovereign
debt crisis are broadly on track, despite some slippage, the
European Commission said.

In a report from its June mission to Greece, the European
Union’s executive said Athens was making good progress on fiscal
consolidation and macroeconomic developments were in line with
the reform programme despite higher inflation.

“Whilst this overall assessment is positive, with programme
implementation being broadly on track, the interim review
identified a number of pressure points and areas where further
progress is needed,” said the report released on the
Commission’s website.

The EU executive and the International Monetary Fund (IMF)
granted Greece a 110 billion euro ($148 billion) bailout in
exchange for a string of painful economic adjustments designed
to rein in a ballooning budget deficit.

The ruling socialists are trying to implement reforms such
as tax hikes and an increase in the pension age, despite strikes
and other protests and against a backdrop of concerns that
Greece’s debt problems could spread to other countries on the
euro zone periphery.

The Commission said Athens’ efforts to meet the goal of
cutting the budget deficit to 8.1 percent this year from 13.6
percent in 2009 were generally on track.

“Fiscal consolidation is ongoing, broadly in line with
plans. State revenue performed somewhat below programme targets,
but state expenditure contracted beyond the target,” it said.

However, Greece did not have full information on finances in
some sectors, including healthcare, that were responsible for
expenditure overruns in the past.

“These concern, in particular, developments in the
healthcare sector, where progress seems to be slow,” it said.

“Other fiscal developments outside central government,
including on public enterprises, require a better reporting
mechanism and need to be thoroughly scrutinised.”

Greek inflation was higher than assumed in the reform
programme. The Commission partly attributed that to “a
lack of competition and the prevalence of oligopolistic market
structures” that pass on higher taxes directly to consumers.

The Commission said that, with the Greek banking system
affected by the recent downgrades of sovereign and bank debt,
the government was considering injecting another tranche from
its guarantee scheme.

For full report click on:

http://ec.europa.eu/economy_finance/articles/financial_operations/pdf/2010-07-06-greece_interim_review_en.pdf

(Reporting by Marcin Grajewski, editing by Timothy Heritage,
John Stonestreet)

UPDATE 1-EU says Greece reforms broadly on track