BUSINESS

Greek bailout talks make major breakthrough on reforms

TAGS: Focus, Economy, Finance, EU

Greece and its international creditors took a big step Friday toward an agreement that will ensure the cash-strapped country gets the money it needs in time to avoid a potential bankruptcy this summer.

For months, the bailout discussions have stalled amid disagreements over what reforms, including to pensions, tax and the labor market that Greece should take in order to get the rescue money due from its most recent international rescue. Without the money, Greece would once again be facing the prospect of having to exit the eurozone – so-called Grexit.

"The big blocks have now been sorted out and that should allow us to speed up and go for the final stretch," Jeroen Dijsselbloem told reporters following a meeting of the eurozone's 19 finance ministers in the Maltese capital of Valletta.

Once a broad agreement is reached in coming weeks, Dijsselbloem said the eurozone will come back to issues related to Greece's stringent medium-term budget targets and the country's debts – key conditions of the Greek government.

EU Commission Vice-President Valdis Dombrovskis said a deal on the latest steps to keep Greece afloat should be within reach by the time the eurozone ministers meet again on May 22 – easily in time for Greece's next big debt-repayment hump in July.

Another key development on Friday appears to be the ongoing involvement of the International Monetary Fund, which has been part of Greece's bailout programs since the first rescue back in 2010.

In recent months, there has been an open disagreement between the IMF and the eurozone over such matters as the sustainability of Greece's debts going forward.

"There is agreement on these main topics, on these big reforms, on the size sequencing and the timing – that is with the IMF absolutely yes," Dijsselbloem said. "I could not talk about an agreement on those issues if the IMF had not agreed."

The broad outlines of Friday's agreement involve Athens making further economic reform commitments until 2020.

Without the loan, Greece would struggle to make a debt payment in July, raising anew the prospect of default. The last time, Greece faced potential bankruptcy was in July 2015, when the Tsipras government eventually agreed a three-year bailout that could amount to 86 billion euros ($91 billion).

Greek Prime Minister Alexis Tsipras said earlier this week that if a breakthrough on plans to pay Athens the next installment fails to materialize over coming days, then the eurozone should hold a special meeting of leaders.

Friday's developments appear to have put paid to that threat.

Tsipras had blamed unnamed negotiators among Greece's European creditors and the International Monetary Fund for "moving the goalposts" each time Greece was close to meeting approval conditions for the bailout.

Even Wolfgang Schaeuble, the German finance minister who has been one of Greece's sharpest critics over the past few years, said he didn't expect any major hitches ahead. "The longest distance is behind us," he said.

[AP]

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