Saturday, February 21, 2015

Eurogroup, Greece Agree to Extend Loan Agreement


BRUSSELS – The other 18 countries that use the euro agreed on Friday to extend Greece’s loan agreement for four months after Athens committed itself to what the Eurogroup described as “a broader and deeper structural reform process.”

For the second time in five days, Eurogroup finance ministers gathered in Brussels in pursuit of an accord to avert a crisis when Greece’s current financial lifeline expires Feb. 28.

“Today we reached the right decision,” was the judgment of German Finance Minister Wolfgang Schäuble following days of often heated discussions.

“Being in government is a rendezvous with reality. Quite frequently it is not as nice as the dream,” he said, in a thinly veiled swipe as Greece’s new leftist Syriza administration.

Syriza won election on a pledge to end the austerity policies that were imposed on Athens as a condition of receiving Eurogroup financial support to pay Greece’s creditors.

Schäuble’s Greek counterpart, Yanis Varoufakis, insisted that the agreement reached Friday was not a defeat for his country, though many observers described the pact as a capitulation on Athens’ part.

“The Greeks left behind the memorandum and are becoming the co-author of reforms and of their destiny,” Varoufakis told reporters in Brussels, referring to austerity measures that pushed Greece’s unemployment rate above 25 percent even as the country’s debt-to-GDP ratio has soared from 110 percent to 185 percent.

Greece managed to secure some changes to the existing austerity program, he said, noting that Friday’s text does not require Athens to further reduce pensions or enact another increase in value added tax on the eve of the spring tourism season.

For the deal to take effect, however, Greece must submit by Monday a list of proposed reforms.

No funds will be made available to Greece until after that list is reviewed and approved by the Eurogroup, the European Central Bank and the International Monetary Fund.

“The Greek authorities will present a first list of reform measures, based on the current arrangement, by the end of Monday, Feb. 23. The institutions will provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review. This list will be further specified and then agreed with the institutions by the end of April,” the Eurogroup said in a statement.

Eurogroup finance ministers will hear the results of that “first view” in a teleconference next Tuesday, Spanish Economy Minister Luis de Guindos said.

“The Greek authorities reiterate their unequivocal commitment to honor their financial obligations to all their creditors fully and timely,” the Eurogroup statement said.


No comments: