Greece gets two-month extension to bailout

Impasse between Troika officials and Greek government ongoing

Euro group chief Jeroen Dijsselbloem said it was vital that Greece ensures a “rapid and full implementation of all the reform measures necessary to conclude the fifth review”.

Euro group chief Jeroen Dijsselbloem said it was vital that Greece ensures a “rapid and full implementation of all the reform measures necessary to conclude the fifth review”.

 

Suzanne Lynch in Brussels

Greece was given a two-month extension to its bailout on Monday, as Athens announced it will hold presidential elections this month, three months earlier than had been expected.

Euro group finance ministers meeting in Brussels yesterday agreed to extend the terms of the Greek bailout to February, with the hope of resolving the impasse between Troika officials and the Greek government over the terms of the fifth bailout review.

While a six-month extension had been considered, it is understood that Athens was resistant to such a long extension, amid continuing public resentment at the terms of the bailout programme.

Following the agreement in Brussels yesterday, the government in Athens announced it was bringing forward presidential elections which will now take place on December 17th, December 22nd and December 27th.

Speaking after yesterday’s meeting, euro group chief Jeroen Dijsselbloem said it was vital that Greece ensures a “rapid and full implementation of all the reform measures necessary to conclude the fifth review”.

“On the basis of the work done it is impossible to positively conclude the fifth review this year. On that basis we need an extension,” he said, noting that a month-long extension would have been too short and may have necessitated a further extension.

Greece will officially table a request for extension on Tuesday, and the decision will have to be approved by a number of national parliaments.

Mr Dijsselbloem added that the euro group was still in favour of a precautionary credit line for Greece when it exits the programme, but this would only be decided when the fifth review mission was successfully completed.

“A political decision on the ECCL (enhanced conditions credit line) and the conditions that go with that will be for another date,” he said.

Speaking after the meeting Irish Minister for State Simon Harris said finance ministers had also tasked the EU institutions with compiling a report assessing the progress made between the troika and the Greek government to date.

He said that while Ireland could relate to Greece’s situation as a programme country, Ireland was also “aware of the challenges” of programme countries, and was “very eager that the structural reforms that Greece needs to undertake are carried out”.

On Sunday the Greek parliament passed the country’s 2015 budget amid clashes between political leaders and protests outside the Greek parliament.

Prime Minister Antonis Samaras hailed the budget as a sign that Greece was approaching the end of “an era of forced bailouts”.

Having avoided early elections earlier this year, elections are now scheduled in Greece for March, with left-wing party Syriza, led by Alexis Tspiras, expected to perform strongly.

Speaking yesterday in Brussels, EU economics commissioner Pierre Moscovici said it was important to stress that the EU did not want to “punish” Greece.

However, he said it was crucial that “root and branch reforms are made so that we have the real modernisation of Greece’s economy so that we can have jobs and growth.”

Greece is still waiting the final disbursement of €1.8 billion under the EU portion of its bailout, though the IMF part of its bailout technically runs until the second quarter of 2016.

In total, Greece received €240 billion in bailout funds from its lenders in two bailouts, when its spiralling bond yields forced the country out of the bond markets.

Troika inspectors will return to Greece today, but Mr Dijsselbloem dismissed suggestions that the review could be completed before the end of this year.

Euro zone finance ministers also agreed yesterday to endorse the European Commission’s plan to reassess the budgets of France, Italy and Belgium in March, after the Commission approved the budgets of all euro zone countries, except Greece and Cyprus, last month.

In their review of the 2015 budgetary plans for member states, ministers stressed the need to continue fiscal reforms.