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Greece clears first hurdle, eurozone backs reform plans

Greece clears first hurdle,  eurozone backs reform plans
The country's creditors in the 19-country eurozone endorsed Greece's request for the extension after the European Commission, European Central Bank and International Monetary Fund - the main institutions handling Greece's loans - backed a list of reforms that Athens proposed in a letter on Monday.

Greece had to draw up the list, which includes measures to combat tax evasion and corruption, to get the bailout extended. Without a financial lifeline over the coming months, it faces the possibility of going bankrupt, imposing capital controls and ditching the euro.

Tuesday's deal comes days before Greece's 240 billion bailout programme expires and is aimed at buying time for both sides to agree on a longer-term deal to ease the burden of the bailout loans.

Greece will, in all likelihood, have to negotiate a new financial agreement with its creditors to see it past June, when big bond repayments are due. The extension must now be approved by some national parliaments, including Germany's, before midnight Saturday. “The three institutions agreed to start the process with this,'' eurogroup president Jeroen Dijsselbloem said on RTL television. “They thought it was a serious enough list and all the countries have just agreed with that in the meeting so we can start.''

Up until last Friday's eurogroup meeting that Greece's bailout could be extended provided it came up with an acceptable reform package, there had been growing concerns that the country would run out of money and be forced out of the euro.  The new left-wing Syriza government was elected to get rid of the austerity measures that accompanied the rescue money that Greece accepted after it was unable to borrow in international markets.

It blames the spending cuts and tax rises as well as unfair economic reforms for the damage done to the Greek economy. Despite a return to modest growth in 2014, Greece's economy is about a quarter smaller than it was in 2008 and unemployment and poverty levels have swelled dramatically.

Agencies

Agencies

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