Moscovici: Greece has delivered reforms for bailout payout

Commissioner for Economic Affairs Pierre Moscovici said it would have been "masochist" suspending EU funds for Spain at this stage. [European Commission]

Greece has delivered the reforms necessary to unlock 2.8 billion in rescue loans from its massive third bailout, the European Commission’s top economics affairs official said on Monday (October 10).

“When we look at the milestones, the measures to take, the judgement we will take will be positive,” said Commissioner Pierre Moscovici as he arrived for talks with eurozone finance ministers in Luxembourg.

“This should open the way to disburse the Greece has delivered the reforms necessary to unlock 2.8 billion in rescue loans from its massive third bailout, the European Commission’s top economics affairs official said today.

Leftist-led Greece had missed several deadlines to deliver fresh reforms and unlock pending bailout loans and, more crucially, launch negotiations on debt relief later in the year.

A eurozone official confirmed that Greece could get the payout but that it would be delayed pending certain clarifications amid complaints by powerful Germany that Athens had still fallen short.

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Germany argued that Greece still needed some more work to complete the milestones, mostly regarding making the privatization fund fully operational. This could delay a decision on the full disbursement of the Greece has delivered the reforms necessary to unlock €2.8 billion euro tranche, the last of the so-called first review of Greece’s aid program.

Apart from paying out the money, much of which will go to pay Greek government arrears, the completion of the 15 reforms means that Greece will be able to start the next stage of the reform process, called the second review, which is a condition for a start of talks on the scope of Greek debt relief.

The reforms, 15 in all, included the long-delayed launch of the new privatisation fund and reforms in the highly sensitive energy sector.

Greece is eager to win the bailout cash and complete a second review. If Athens completes all the actions from the second reform review by the end of the year, it could begin negotiations on the terms of medium- to long-term debt relief from the eurozone — an important political victory for the government.

Germany, which holds elections next year, is loathe to forgive any of Greece’s debt, but tackling the problem is a firm demand of rescue partner, the International Monetary Fund.

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Greek lawmakers yesterday (27 September) passed reforms sought by the country’s creditors to cut pension spending and expedite privatisations in exchange for financial aid under the country’s latest international bailout.

The Washington-based IMF, a key player in Greece’s three bailouts, has said it won’t give a penny to the latest one until it sees a concrete plan from the Europeans to substantially cut Greece’s massive debt burden.

But the IMF and EU creditors disagree sharply on how much Athens can improve its finances through ongoing reforms.

“I wish the IMF remains what it is already, a structural player in this programme,” Moscovici said.

Athens said last week that Greece’s debt will grow to 315 billion ($351 billion) or 178.9% of output this year.

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