October 27, 2016

Greek reform review will most likely start next week – EU’s Dombrovskis

Eurogroup President Jeroen Dijsselbloem

Greece’s European lenders will probably start a review of the country’s reform programme next week, a senior official said, though talks on the debt relief that Athens craves may be several months away.

To start those talks, Greece needs to successfully conclude a first review of reforms agreed last summer under its third bailout programme by its lenders, which will include both the EU executive and the International Monetary Fund.

“We are ready to start the review as soon as possible, most likely next week. But we are not setting any time limit for when the review should be concluded,” European Commission Vice President Valdis Dombrovskis said in an interview with Greek daily Kathimerini published on Friday.

Dombrovskis said that, to secure a positive progress review, Greece should implement the pension reform, set up a new privatisation fund and find measures to achieve primary budget surpluses for 2016-2018.

Greece and some eurozone officials have said the first review could be concluded next month, though the chairman of eurozone finance ministers, Jeroen Dijsselbloem, said on Thursday “it would rather be months than weeks.”

“If Greece concludes the review, it will show it is serious with its promises, its programme is on track and this would be a very positive step so that stability is restored,” Dombrovskis said.

Greek Finance Minister Euclid Tsakalotos said he believed an agreement could be reached in four weeks, according to an interview with German newspaper Handelsblatt published on Friday.

Tsakalotos has been touring eurozone capitals to explain the reform measures and seek support for an early, positive review.

In the Handelsblatt interview he said he believed all the finance ministers he visited during the tour had recognised Greece’s reform efforts and the country had regained credibility.

Dombrovskis said the Commission was working on the assumption that the IMF would continue to be part of the Greek bailout programme. The fund offered financing for Greece’s first two bailouts in 2010 and 2012.

Tsakalotos said the IMF’s involvement had been agreed and ‘we stand by this commitment’. Greece had said in December that the participation of the IMF was not necessary.

IMF chief Christine Lagarde told the German Sueddeutsche Zeitung newspaper it will probably take the fund until the second quarter to decide whether to take part in the third bailout.

Lagarde said the question of debt sustainability and progress on pension reforms would be key to any participation.

“It is clear that pension reform is the trigger that will prove that Greece’s economic position is improving,” she was quoted as saying.

The IMF has not disbursed any aid to Greece since August 2014 under a previous program due to expire next March.

The participation of the fund in the third bailout is a key condition for Germany, which believes the European Commission alone as the representative of creditors could be too soft on Athens when it comes to reform implementation.

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