Hopes expressed that Greece can secure deal with European creditors within a week

BRUSSELS – Greece failed to convince European creditors Monday to release vital bailout funds to shore up the country’s public coffers and its crippled banks.

Though the Greek government has met many of the conditions attached to the country’s third bailout, it still needs to push through financial reforms, including over how to deal with those in arrears on their mortgages.

Jeroen Dijsselbloem, the eurozone’s top official, said after a meeting of the bloc’s 19 finance ministers that he hopes an agreement can be agreed on in the “coming days.”

Greece is due 2 billion euros ($2.2 billion) from its bailout as well as 10 billion euros earmarked for the country’s banks.

But it needs to pass a series of economic reform measures to get the money stemming from the three-year 86 billion-euro ($93 billion) bailout program agreed on this summer in the face of potential economic collapse.

Though the left-wing Greek government, re-elected in September, has been praised for its recent economic reform efforts, Dijsselbloem said a few issues still needed to be dealt with before the money can be released. Topping that list is how to deal with people in serious arrears on their mortgages in Greece.

Once the promised reforms have been passed, discussions between Greece and its creditors can move on to the key issues of recapitalizing Greece’s ailing banks and how to lighten Greece’s public debt load.

As a condition of the bailout agreement — the country’s third since 2010 — Greece has to enact a series of measures to overhaul its economy, such as reforming its labour markets, raising taxes, cutting spending and putting state investments up for sale. If it doesn’t, Greece would be cut off from its bailout funds and would again face the prospect of bankruptcy and an exit from the euro.

Greece has relied on bailout funds from its eurozone partners and the International Monetary Fund since the spring of 2010 and is heading back into recession after the government imposed painful controls on money transfers in late June, when it appeared the country was heading out of the euro. As a result, Greece’s debt burden in terms of its annual GDP is expected to head up to around 190 per cent.

The Greek banks remain hobbled and need a cash injection quickly so they can start operating normally — the most visible restraint is that cash withdrawals remain confined to 60 euros a day or 420 a week. Last month, the European Central Bank said Greece’s battered banks need 14.4 billion euros ($15.8 billion) in fresh money to get back on their feet and resume normal business.

But to get the money for the banks, Greece has to pass a series of hurdles, Monday’s discussion over the 2 billion euros installment being the latest. Once that is passed, another set of Greek reforms have to be agreed on, upon which a further 1 billion-euro loan is contingent.