Deal gives Greece breathing space but with conditions

Greece signed up to a provisional agreement yesterday that paves the way for an extension of its bailout programme until June, but Athens must still submit a raft of reform measures to authorities by Monday.

Euro zone finance ministers yesterday backed a four-month extension of the Greek bailout programme, but retain the right to review the decision next week if reform measures proposed by the Greek government are deemed insufficient. The proposal will also need to be ratified by a number of national parliaments, including the German Bundestag, before the Greek bailout expires next Saturday.

Speaking in Brussels after the meeting, Greek finance minister Yanis Varoufakis hailed the deal as a “mutually beneficial agreement between us and our European partners.” He said that Greece would now be the “co-authors” of a new list of reforms that would be chosen “in a way of our choosing and in collaboration with our partners. We are no longer going to be following a script that was given to us by external agencies, “ he said. “We’re going to write our own script on reforms that need to be enacted. We will be judged on the basis of those.”

While the agreed text contains few details of the reforms that will be offered by Greece, it does include a commitment to “take economic circumstances into account” when assessing Greece’s primary surplus target for 2015 – a key demand of the Syriza-led government – though no specific figures were finalised.

Speaking after the meeting, Minister for Finance Michael Noonan said the agreement was an "important first step". "We hope that it will lead to a second step on Monday night, Tuesday morning, but then of course there's a third step with ratifications in parliaments."

He said it was now up to the Greek authorities to bring forward the conditions to the authorities, and the institutions will then “give a first view as to whether it is sufficiently comprehensive to lead to a successful conclusion to the programme.”

Should the programme be extended, the benefits of being in a programme will then be restored to the Greek authorities, Minister Noonan said. “They’ll be able to draw down the funding that was committed to them and will take the pressure off their banking system.”

ECB sources said last night that, following the decision of the euro group, capital controls for Greece were “out of the question.”

However, German finance minister Wolfgang Schauble warned that there would be no disbursement of funds to Greece “as long as the programme isn’t successfully completed.”

Euro group president Jeroen Dijsselbloem defended the agreement last night, pointing out that one country could not dictate the terms of an agreement.

“In the euro group we have to work with 19 ministers, who have 19 mandates,” he said. “Any programme for support or agreement will always be about money and about conditions. It cannot be one-sided, one country [CANNOT]say, can I have the support, but formulate my own conditions.”

Finance ministers are expected to hold a conference call on Monday to discuss the Greek reform measures. If the measures are accepted, a number of national parliaments will then move to ratify the agreement next week.

Asked if the euro group expected a third bailout for Greece in June, Mr Dijsselbloem said there had been no request for a possible follow-up arrangement for Greece. However, he said that future arrangements had to be considered. “There has to be a discussion about the possibility and necessity of a follow-up arrangement. I think we must make the best use possible of the four months to talk about the future.”