Creditors back Greece’s planned reforms in bailout extension bid

An encouraging initial reaction from the so-called institutions –the European Commission, European Central Bank and International Monetary Fund – was backed by the eurozone. It now goes to some member nations for approval.

“We therefore agreed to proceed with the national procedures with a view to reaching the final decision on the extension by up to four months,” a eurogroup statement said.

Greece’s bailout programme ends at the end of the month and without further support over the coming months, the country faces the possibility of going bankrupt, imposing capital controls and ditching the euro.

“The three institutions agreed to start the process with this. They thought it was a serious enough list and all the countries have just agreed with that in the meeting so we can start,” said eurogroup president Jeroen Dijsselbloem.

The proposal to extend Greece’s bailout, which ends at the end of the month, now goes to some member nations for approval.

The reform plans, which include measures to deal with tax evasion and corruption and were sent ahead of Monday’s deadline, also met with a favourable response in the markets. The main stock market in Athens was up around 9 per cent in afternoon trading.

Although the reform measures were welcomed, the eurozone ministers said Greece had to take further steps to flesh out the details. “We call on the Greek authorities to further develop and broaden the list of reform measure,” the eurozone said in a statement.

So far, the reform list “is sufficiently comprehensive to be a valid starting point,” EU financial affairs commissioner Pierre Moscovici wrote. “We are encouraged by the commitment to combat tax evasion and corruption... as well as to pursue reforms to modernise the public administration.”

In its list of reforms, the Greek government says it will combat tax evasion and corruption, reduce bureaucracy, review public spending, modernise the pension system, reform the judicial system and address rising poverty through measures that have “no fiscal effect”. It says authorities will “turn the fight against corruption into a national priority”.

It pledges not to roll back any privatisations that have already been completed and to “respect the process, according to the law”, of any tenders that have already been launched. Privatisation was one of the elements of Greece’s bailout that the governing Syriza party had promised to cancel.

The letter is a general outline of policies and does not include any figures or specific details on how the policies will be achieved.

Mr Moscovici said he would work “with the new administration to elaborate what are at the moment still general commitments and transform these into clear policy actions”.

Earlier, an EU Commission official said the Commission was “notably encouraged by the strong commitment to combat tax evasion and corruption”.

He also said the arrival of the list was “preceded by constructive exchanges over the weekend between the Greek authorities and representatives of the Commission and the other institutions”.