web_jeroen_dijsselbloem_2013-3.jpg

Dutch finance minister and president of the Eurogroup Jeroen Dijsselbloem. Credit: Jeroen Dijsselbloem Credit: Rijksoverheid.nl

Speaking following a meeting of eurozone finance ministers today, Eurogroup president Jeroen Dijsselbloem said the Greek government, bailout monitors and the country’s EU creditors had settled on the “size, timing and sequencing” of key future reforms.

Mission teams can return to Athens for further technical work and to reach full staff level agreement as soon as possible #Greece #eurogroup

— Jeroen Dijsselbloem (@J_Dijsselbloem) 7 April 2017

The agreement breaks a complex impasse between the different parties to the deal that has delayed the release of the next round of funding and threatened to derail the bailout altogether.

However some contentious issues, to do with Greece’s required budget surplus and debt relief, have been kicked down the road. These are some of the biggest sticking points for the International Monetary Fund, whose participation in the programme is critical to its continuation.

While Dijsselbloem said the IMF was on board with the reforms agreed today, he said it would be going much too far ahead to discuss whether the fund will join the programme as a full financial partner or whether this is still necessary for the release of more funds.

“The good news today is that we have solved some big issues regarding big reforms that are still needed,” he stressed.

The agreement includes reform to Greece’s pension system in 2019 and personal income tax in 2020, worth 1% of GDP each.

At the same time, Greece will be able to legislate policies to spend the funds it raises through both. These will be designed, put to parliament and implemented simultaneously, provided Greece’s economy is still on track with the bailout’s requirements.

However a number of details need to be ironed out, and there is still yet to be a full agreement between bailout monitors and Greek government officials.

Dijesselbloem described this as putting the last dots on the i’s, and Gerry Rice, IMF spokesman, agreed there were “good prospects” for successfully concluding discussions on outstanding policy issues.

Rice added: “An agreement on policies will have to be followed by discussions with euro area countries to ensure satisfactory assurances on a credible strategy to restore debt sustainability, before a programme is presented to the IMF executive board.”

This issue of debt relief, which the IMF sees as complementary to a separate debate about how long Greece needs to maintain a stipulated budget surplus of 3.5% of GDP after the programme finishes, has been a major source of disagreement between the bailout’s parties.

This has been the basis of the IMF’s refusal so far to participate in the bailout – a condition countries like Germany believe is key to its credibility, and have hinted are vital to its future.

Without the release of the next round of bailout funding, Greece will be unable to afford a debt repayment due in July.

Dijesselbloem added that the delay is also negatively impacting Greece’s progress.

“The situation in Greece is not improving,” he noted. “That is something we are all responsible for. We are taking too long.

“The Greek economy last year was picking up, and that momentum is slipping away from us. So we really need to work fast and have it done certainly well in time for the next payments that Greece needs to make and the disbursements that are needed for that.”