Eurogroup approves Greece’s reform measures

The Bundestag is expected to vote on the extension of the Greek loan programme on Friday after the eurogroup yesterday approved reform measures proposed by Greece.

Euro zone finance ministers backed the deal following an hour-long conference call, welcoming the proposal as a “valid starting point” for a successful conclusion of the review. But in a sign of tough negotiations ahead, the eurogroup urged the Greek authorities to “further develop and broaden the list of reform measures”.

The European Commission also endorsed the proposals, but with the caveat the Greek government must refrain from "any rollback of measures and unilateral changes to the policies and structural reforms that would negatively impact fiscal targets".

Tsipras’s pledges

The formal approval of the reform measures brings to an end a tumultuous period in the relations between

Athens

and its international lenders since

Alexis Tsipras

swept to power a month ago pledging to end the era of bailouts for Greece.

It also paves the way for the formal ratification of the agreement by a number of national parliaments this week, in advance of the expiration of the Greek bailout on Saturday. German chancellor Angela Merkel and her finance minister Wolfgang Schäuble are understood to have urged their party to back the deal at a closed-door meeting of the Christian Democrats parliamentary party. The party will gather to discuss the issue tomorrow morning.

The other five countries that could require parliamentary ratification – Finland, the Netherlands, Slovakia, Estonia and Austria – have indicated they will back the agreement.

Despite the breakthrough, months of tough talks lie ahead for Greece, with EU officials insisting the disbursement of the outstanding €7.2 billion due to Greece is conditional on “a successful completion of the programme”. The accord also includes a specific provision to re-examine the proposals in April.

Greece's other creditors – the European Central Bank and the IMF – also raised concerns about the Greek plan yesterday, with IMF managing director Christine Lagarde warning the measures were "generally not very specific" and suffered a lack of "clear assurances" inimportant areas such as pensions and privatisations.

Guarded welcome

Similarly, the ECB gave a guarded welcome, with president

Mario Draghi

stating any reform measures that differ from those in the existing programme commitments will have to be assessed to ensure they are “replaced with measures of equal or better quality”.

Among the measures in the six-page reform list submitted by Greek finance minister Yanis Varoufakis on Monday evening are commitments to improve the collection of VAT, broaden the definition of tax fraud and evasion, and deal with non-performing loans in the banking sector. It also pledged to “review and control spending in every area of government spending”.

Eurogroup president Jeroen Dijsselbloem told a European Parliament committee yesterday morning Greece is likely to need further assistance when its second bailout eventually comes to an end.

Greek financial markets rallied strongly in response to the eurogroup approval.