By Judith Ugwumadu | 24 February 2015
The Greek authorities have pledged to tackle corruption, clamp down on tax evasion and improve public sector efficiency in a reform package that forms part of an extension to its international bailout deal.
The deal to extend the country's financial support came after a third round of talks between the country and the other 18 eurozone finance ministers, which concluded on Friday.
As part of the deal, Greece has handed over a list of reforms to international lenders, which was required as part of a loan package agreement.
The country’s bailout reform list must be approved by the International Monetary Fund and the European Commission before the government secures a four-month extension on its eurozone loan.
Measures to tackle corruption, clamp down on tax evasion and improve public sector efficiency must be finalised before its current €240bn bailout deal with the ‘troika’ of the European Union, the European Central Bank and the IMF expires on Saturday.
If the reform package is approved by the troika, formal support for the extension will also be needed from eurozone members. The Bundestag among the parliaments that will need to approve the terms before German Finance Minister Wolfgang Schäuble can give his approval for a four-month extension on its eurozone loan programme, known as the Master Financial Assistance Facility Agreement. This would let the Greek government fund itself in the short term and allow time for further negotiations.
If the IMF and European Commission decide that the reform measures need extra work, the Greek government would have until April to develop them further.
Dutch finance minister Jeroen Dijsselbloem, who chaired the Eurogroup meeting on Friday, said: ‘[The deal] will allow us to bridge the time for discussion between the Eurogroup, the institutions and Greece on a possible follow-up arrangement in which the International Monetary Fund will also continue to play its role.
‘The first step that we’ve agreed together with the Greek authorities in this process is to present the first list of their reform ambitions. Reform measures based first of all of course on the current arrangements, but also using the flexibility that is in the programmes. This first list of reform measures should be available and presented on Monday.’
Greek prime minister Alexis Tsipras added: ‘We won a battle, but not the war... The difficulties, the real difficulties, not only those related to the discussions and the relationship with our partners, are ahead of us.’
He said the agreement ‘cancels austerity’ and ends promises by the previous government to cut wages, pensions and public sector workers and increase sales taxes.
Greece’s finance minister Yanis Varoufakis said: ‘We averted the view that a country that is heavily indebted and in a programme cannot possibly claim that elections can change something.
‘As of today we are beginning to be cautious of our destiny, cautious of the reforms we want to implement, which we are going to dictate, which we will discuss with our partners and which we are going to use as a weapons against the deep malignancies of the Greek economy.’
In a letter to the Eurogroup, IMF managing director Christine Lagarde indicated that the fund was broadly supportive of Greece's list of reforms, but would like to see clear assurances that the government was committed to designing and implementing comprehensive pension and VAT reforms.
She said her staff had reviewed the list of measures submitted by Greece and would support the conclusion that the list ‘is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review', as called for by the Eurogroup at its last meeting.
