BRUSSELS – Greece’s bailout inspectors were cleared Monday to return to Athens to complete a much-delayed review of the government’s economic reform commitments that, if deemed sufficient, will pave the way for talks on relieving the country’s debt burden.
Jeroen Dijsselbloem, the Dutch finance minister who is also the eurozone’s top official, confirmed that the so-called mission chiefs would return to the Greek capital Tuesday citing “enough common ground” between them.
“We stressed that more work needs to be done, more effort needs to be put in for there to be a good outcome,” he said after a meeting of the eurozone’s 19 finance ministers in Brussels.
Though the Greek government has delivered on much of its requirements in recent months, it has struggled to convince creditors that its pension reform proposals go far enough or that its overall budget plans follow the path outlined last summer in the country’s third bailout agreement.
“There are still fiscal gaps to be filled and some of the reforms will have to be deepened,” Dijsselbloem said.
A successful review of the reforms demanded in the country’s latest bailout program is needed to release more rescue loans for Athens to pay its debts and to kick-start discussions on how to reduce Greece’s debt burden. The next big repayment is due to the European Central Bank in July.
Dijsselbloem confirmed that the debt discussions could take place soon and would inevitably be part of discussions about the next stage of Greece’s bailout program. He cited a “long-standing promise” to make Greece’s debt servicing costs manageable if Greece fulfilled its end of the bargain.
Greece has been unable to fund itself for the past six years and has relied on bailout loans from eurozone partners and the International Monetary Fund to avoid bankruptcy.
In July, the newly elected Greek coalition government of left-wing Prime Minister Alexis Tsipras agreed to the country’s third bailout since 2010. A further 86 billion euros ($94 billion) was made available to Greece, but would be delivered only if targets were met. Around a quarter of the aid has been disbursed.
Following a recession that’s seen Greek economic output shrink by around a quarter, Greece’s debt stands at around 175 per cent of the country’s annual GDP — far more than any other eurozone country and a level that the IMF considers unmanageable.
The IMF, which has yet to commit to Greece’s third bailout program, has argued strongly in favour of a big debt relief package for Greece and has suggested that the forecasts underpinning the Greek bailout plan are too rosy.
Though an outright reduction in Greece’s debt — a so-called haircut — has been ruled out by eurozone creditors, the repayment timetable for loans could be extended and interest rates could be reduced.
“I am sure that sensible people, when they get across the table, will find a sensible conclusion,” Greek Finance Minister Euclid Tsakalotos said.
Worries over Greece have re-emerged in recent weeks partly because the left-led Greek government has a small parliamentary majority, which makes it more difficult to deliver the reforms required by creditors. The government also is facing growing public opposition to its pension reform plans.
The country also faces a daunting challenge to cope with unrelenting flows of migrants through its territory from Turkey to central Europe. An estimated 36,000 asylum seekers are currently stuck in Greece, with thousands more due daily by boat from Turkey.
Dijsselbloem said Greece needed to deal separately with its fiscal and migrant crises, saying that the latter issues was “totally detached from the economic program.”
Pylas reported from London.