Date
27 July 2017
Greek Finance Minister Euclid Tsakalotos (left) talks to Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem during a eurozone finance ministers meeting in Brussels. Photo: Reuters
Greek Finance Minister Euclid Tsakalotos (left) talks to Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem during a eurozone finance ministers meeting in Brussels. Photo: Reuters

Greece, lenders agree to work out new reforms to unlock aid

Greece and its international lenders agreed on Monday to let expert teams work out new reforms to Greek pensions, income tax and labor market that would allow Athens to eventually qualify for more cheap loans, Reuters reports.

Greece needs a new tranche of financial aid under its 86 billion euro (US$91.25 billion) bailout by the third quarter of the year to meet debt repayments, but the last mission to Athens broke down in acrimony late last year.

A Greek government official said extra reforms were to be fiscally neutral and take effect from the start of 2019 after the latest bailout ends in 2018.

Experts from the European Commission, the European Central Bank, the eurozone bailout fund ESM and the International Monetary Fund are to travel to Athens very soon, the head of eurozone finance ministers Jeroen Dijsselbloem said.

“There will be a change in the policy mix, moving away from austerity and putting more emphasis on deep reforms which is also a key element for the IMF,” he said.

The agreement is a compromise between conflicting views of the IMF, the eurozone and Greece as to how to make the economy more efficient and public finances sustainable.

The IMF believes that the pension system in Greece should undergo a deeper overhaul than so far, while Greece has flatly refused to have the reform reopened.

The eurozone has said that the reforms agreed so far were enough for Greece to meet and maintain its target of a surplus before debt costs of 3.5 percent of GDP from 2018 onwards.

The IMF, however, has said the current reforms would only produce a 1.5 percent surplus and that income and labor market reforms were needed, too.

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