Greece’s European creditors voiced hope Monday that the country's newly elected government will deliver on promises to overhaul its economy, which would pave the way to the release of billions of bailout cash and potential help on debt repayments.
As the eurozone's 19 finance ministers were meeting in Luxembourg to discuss the country's outlook, Greek Prime Minister Alexis Tsipras was set to submit his government's draft 2016 budget to parliament later Monday.
The budget will outline reforms required under the country's new three-year, 86 billion-euro ($96 billion) international bailout. Without delivering on its side of the bailout deal agreed in July, Greece would not be able to tap the bailout funds and once again face the prospect of bankruptcy and an exit from the euro.
"A lot of work has to be done,” said Jeroen Dijsselbloem, the eurozone’s top official. “It's in the Greek interest to deliver as quickly as possible.”
He said Greece must enact a chunk of its promised reforms before creditors can also start discussing how to lighten the country's debt load.
Greece has relied on bailout funds from its eurozone partners as well as the International Monetary Fund since the spring of 2010. Despite years of spending cuts and tax increases that were required in return for the bailouts, the country is still not in a position to meet its debt commitments on its own.
In return for the third bailout, which was negotiated after months of tortuous negotiations that saw Greeces banks shuttered for weeks and strict controls on money flows imposed, the Greek government has to deliver on a series of measures, such as sales taxes increases, labor market reforms and privatizations.
Pierre Moscovici, the European Commission's top economy official, said hes encouraged by Tsipras' recent pledges that his government will meet its promises.
“I am confident there is a common will to avoid a new drama, a new tragedy with Greece, but at the same time we must also be vigilant,” Moscovici said arriving for the meeting in Luxembourg. “There is a positive dynamic in relations between the eurozone and Greece.”
He said the key word for Greece is “implementation.”
The Greek government is hoping that meeting its obligations will pave the way to some debt relief in the form of longer repayment periods and lower interest rates on its bailout loans.
The most recent figures show Greece owed a little more than 300 billion euros at the end of the first quarter, which equates to just under 170 percent of its annual GDP.
The eurozone has said it will look at Greece’s debt after the country clears the first review due under the terms of bailout agreement. Initially that was expected in October. The IMF has said Greece needs massive debt relief if it's going to lend the country more money. It has suggested doubling the grace period on Greece’s loans from eurozone countries to 20 years and the subsequent repayment period to 40.
Because of Greece’s general election last month, which saw Tsipras' left-wing Syriza retain power in coalition with the Independent Greeks, there are some concerns in the markets that Greece is behind schedule and that the first payments due from the bailout may be delayed.
However, finance ministers did not appear to be in a critical mood as they arrived for Monday's meeting.
“There are one or two points which are delayed by the elections,” said Austrian Finance Minister Hans Joerg Schelling. “I believe Greece at the moment is on track, as far as the implementation goes.”
And Wolfgang Schaeuble, the German finance minister who suggested earlier this year that Greece should be given a temporary opt-out from the euro currency, appeared conciliatory on his arrival at Monday's meeting.
“It's a little early to talk about delays. Rather, we will naturally await the first report and then well see,” Schaeuble said.