BUSINESS

Swift deal on Greece needed to avert fresh uncertainty, EU's Dombrovskis says

MICHELE KAMBAS

TAGS: Economy, Diplomacy

There are costs in delaying agreement on Greece's bailout review, the European Commission's vice president responsible for the euro was quoted as saying on Thursday, and a solution needs to be found swiftly.

Inconclusive talks between Greece and its international creditors on economic reforms and debt relief have cast doubt over the future of Greece's 85 billion euro bailout program.

"There is a common understanding that time lost in reaching an agreement will have a cost for everyone," Valdis Dombrovskis told Greek news portal Euro2day.

Dombrovskis, however, said the situation in Greece could not be compared with to the situation in early 2015 when the country narrowly avoided default and toppling out of the euro zone.

Delays in the bailout review mean delays in financial aid. Greece has about 7.5 billion euros of debt falling due by July, which it is unable to pay without more loans from lenders.

So far it has received some 31.7 billion from the latest bailout accord, its third since 2010.

Disagreements over labor and energy market reforms lenders want Greece to adopt have been complicated by broader misgivings from the International Monetary Fund, which will not participate in the most recent bailout because of concerns Athens will never be able to extricate itself from debt.

European policymakers have said that the bailout program cannot continue without IMF input, although a German politician close to Chancellor Angela Merkel said on Thursday IMF participation is no longer crucial.

The fundamentals of the Greek economy have been strengthened, Dombrovskis said, but that strong growth potential was contingent on reforms being implemented.

"So policy makers are faced with this choice – work hard to reach an agreement that will build on progress made or slip back into uncertainty. I think the choice is obvious," he said.

Recent Greek economic data has shown how tenuous the recovery is.

[Reuters]

 

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