By Judith Ugwumadu | 24 February 2015
Greece is one step closer to securing a four-month extension on its eurozone loan after the International Monetary Fund threw its support behind the country’s list of reforms.
A letter, released by the fund reflected a swift assurance that the international lender was broadly supportive of the Greek government’s proposals.
A deal to extend the country’s financial support was struck 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.
However, 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.
IMF managing director Christine Lagarde said her staff had reviewed the list of measures to clamp down on tax evasion and improve public sector efficiency 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.
But she said that, although the list was comprehensive, it was ‘generally not specific’, adding that this was to be expected given that the Syriza-led government had not been long in office.
‘In some areas, like combating tax evasion and corruption, I am encouraged with what appears to be a stronger resolve on the part of the new authorities in Athens, and we look forward to learn more about their plans,’ Lagarde said.
But, she said there were areas where the IMF would like to Greece go further.
‘We note in particular that there are neither clear commitments to design and implement the envisaged comprehensive pension and VAT policy reforms, nor unequivocal undertakings to continue already-agreed policies for opening up closed sectors, for administrative reforms, for privatisation, and for labour market reforms.’
Such commitments were critical for Greece’s ability to meet the basic objectives of its IMF-supported program.
Greece is now waiting for its reform list to be approved by eurozone leaders and the European Commission.
