Greece gets four-month bailout extension

Feb 24, 2015, 11:57 AM EST
Greek Finance Minister Yanis Varoufakis (R) speaks with his French counterpart Michel Sapin during an emergency Eurogroup finance ministers meeting at the European Council in Brussels on February 20, 2015.
EMMANUEL DUNAND/AFP/Getty Images

Eurozone finance ministers approved a four-month extension of Greece’s bailout plan on Tuesday, although much remains to be done.  The Wall Street Journal writes that the ministers approved the extension to the €240 billion ($273 billion) bailout, which will now run until the end of June rather than expiring at the end of February, after discussing a list of reform measures proposed by the Greek government. However, Greece still faces challenges getting its hands on the rescue cash, with the International Monetary Fund saying the list of overhaul measures is “generally not that specific.” Similar concerns were raised by the European Central Bank, which has been overseeing Greece’s bailout along with the IMF and the European Commission. Despite such concerns, Greek stocks and bonds surged after the bailout extension was approved by eurozone financial ministers, with Athens’ main stock exchange close to 9% higher on the day, primarily led by banks. The bailout extension still needs to be voted on by parliaments in a handful of eurozone countries—including Germany and Finland—but approval there is expected.

 

Finance ministers sealed the decision in a one-hour telephone conference convened by Eurogroup chairman Jeroen Dijsselbloem after the new leftist-led Athens government sent him a detailed list of reforms it plans to implement by July, according to Reuters. The ministers reviewed a six-page document signed by Marxist Finance Minister Yanis Varoufakis that watered down campaign promises to halt privatisations, boost welfare spending and raise the minimum wage, vowing to consult partners before key reforms and to keep them budget-neutral.

 

In a statement, the 19-nation Eurogroup urged Greece to develop and broaden the list of reform measures, based on "the current arrangement" - a euphemism for the bailout agreement which leftist Prime Minister Alexis Tsipras had vowed to scrap. Germany's rejection of an initial Greek request for a six-month loan extension forced Athens into a string of politically sensitive concessions, postponing or backing away from campaign promises to reverse austerity, scrap the bailout and end cooperation with the "troika" of EU, ECB and IMF inspectors. While Tsipras has won broad support in his coalition for the deal clinched in Brussels, some hardline leftists have criticised it and the conservative opposition has charged that his illusions have been punctured.

 

A.P. writes that in its list of reforms, the Greek government says it will combat tax evasion and corruption, reduce bureaucracy, review public spending, modernize the pension system, reform the judicial system and address rising poverty through measures that have "no fiscal effect." It says authorities will "turn the fight against corruption into a national priority." It pledges not to roll back any privatizations that have already been completed and to "respect the process, according to the law," of any tenders that have already been launched. Privatization was one of the elements of Greece's bailout that Tsipras' Syriza party had promised to cancel.

 

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