In a short statement announcing its decision, the eurogroup made clear that while it had signed off on the Greek letter as a "valid starting point” for resumption of the current bailout programme they would continue push Athens to develop the list more thoroughly in the upcoming weeks. Greece faces an April deadline to finalise an agreed list of reforms.
However, both the International Monetary Fund and the European Central Bank, the other two of the three bailout monitors, questioned the resubmitted plan, with one official warning that "we’re in for very choppy waters”.
In a letter to Jeroen Dijsselbloem, chairman of the eurozone finance ministers, IMF managing director Christine Lagarde said: "In quite a few areas . . . including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged in the [programme] memorandum.”
ECB President Mario Draghi, also raised reservations, writing in a separate letter to the Dutch finance minister that the Greek government’s new commitments differ from the existing programme "in a number of areas”. He said the ECB would have to "assess during the review” whether they could replace any austerity measures contained in the existing bailout.Without the IMF and ECB on board, Athens could face difficult weeks ahead completing the current bailout programme, particularly as the debate shifts to national capitals, where several eurozone parliaments must approve the extension before the week’s end.
Although the IMF rescue is separate from the EU’s portion of the bailout, several northern eurozone countries, crucially Germany, have insisted that the EU only disburse aid a the same time as the IMF.
In the German Bundestag there remains strong scepticism about the Greek government’s ability to meet the programme’s reform requirements.
Parliamentarians from Chancellor Angela Merkel’s party — the Christian Democratic Union and its Bavarian sister party, the Christian Social Union — were to meet on Tuesday afternoon with Wolfgang Schäuble, the German finance minister, to discuss the Greek extension.
The CDU/CSU group is viewed as the most critical of Athens’ stance, and the meeting was intended to prevent defections. Leaders of the German government’s grand coalition were also due to meet on Tuesday night, though that session is expected to be less contentious with leaders of the Social Democratic party, the junior coalition partner, largely agreeing on the deal.
Officials at third bailout monitor, the European Commission, said the reform list — which was sent to Mr Dijsselbloem "close to midnight” on Monday — was significantly improved over more vague outlines discussed at the weekend and, unlike the IMF and ECB, gave it more unequivocal support.
"In the commission’s view, this 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,” said one of the officials. "We are notably encouraged by the strong commitment to combat tax evasion and corruption.”
Greek stocks surged amid hopes that a deal would be reached, with the country’s main index rising 9.8 per cent, while the FTSE Greek banks index jumped 17 per cent. Bonds also rallied. Three-year yields sank 257 basis points to 12.49 per cent and 10-year yields fell below 9 per cent.
According to Greece’s submission, a copy of which was obtained by the Financial Times, Yanis Varoufakis, the Greek finance minister, vowed to continue to work closely with other eurozone authorities to finalise the reform measures by April.
"The Greek government [is] committed to working in close co-operation
with European partners and institutions, as well as with the
International Monetary Fund, and take actions that strengthen fiscal
sustainability, guarantee financial stability and promote economic
recovery,” Mr Varoufakis wrote.
It also vows to bring in revenues by fighting corruption, including fuel and tobacco smuggling and crack down on tax evasion, including legislation to "broaden [the] definition of tax fraud and evasion while disbanding tax immunity”. No estimates on costs, savings or added revenues are included in the letter.
On the three most contentious issues between Athens and EU authorities — changes to the value added tax, pension increases and labour market liberalisation — the letter is slightly vaguer. It promises to "reform VAT policy” to ensure more is collected, though bailout monitors have been pushing for a VAT increase.
The letter says Athens is "committed to continue modernising the pension system”, but is not clear on whether the government will push forward with its original plans to increase benefits. It also says it will adopt "EU best practice” on labour market reforms, but makes few other concrete commitments.
It also vows not to "roll back privatisations that have been
completed”, but says it will review privatisations that have not yet
been launched — a potentially controversial stance with creditors, who
have relied on revenues from those sell-offs to reduce their bailout
loans to Greece.
(Financial Times)
