Business Irish

Sunday 18 February 2018

Greece readies economic reforms to seal bailout extension deal

A Greek national flag flies near the Parthenon temple on Acropolis Hill in Athens, Greece, on Saturday, Feb. 21, 2015. Photo: Yorgos Karahalis/Bloomberg
A Greek national flag flies near the Parthenon temple on Acropolis Hill in Athens, Greece, on Saturday, Feb. 21, 2015. Photo: Yorgos Karahalis/Bloomberg
Colm Kelpie

Colm Kelpie

The GREEK government was last night preparing economic reform plans to help seal a deal with Eurozone finance ministers to ensure its bailout agreement is extended.

Prime Minister Alexis Tsipras is under fire from some on the hard left in his party who say that the deal thrashed out at an emergency meeting of finance ministers on Friday let voters down.

The agreement removed the immediate threat of Greece running out of money next month and possibly being forced from the euro. But it was a defeat for Mr Tsipras, whose Syriza party swept to power last month on promises to end austerity and renegotiate the current bailout.

Athens has moved to limit the fallout from the deal, saying the reform package - expected to include measures cracking down on tax evasion and smuggling - is being decided by the Greek people.

"The list will include a series of reforms that the Greek government will propose - and I underline that," a government spokesman said.

The list was due to be submitted to Brussels either late last night or this morning. Following that, a teleconference call is due to take place between Eurozone finance ministers.

The reforms aim to raise revenue in ways favoured by Mr Tsipras's leftist Syriza party.

Following a series of testy Eurogroup meetings, the international creditors will scrutinise the reforms to ensure they comply with another of Greece's concessions - that nothing it does during the four months will burden the state budget.

Meanwhile, Cantor Fitzgerald Ireland has said that the deal to extend Greece's bailout will be a relief to Taoiseach Enda Kenny.

"For the time being, Europe can relax until we get another round of brinkmanship in four months' time , when Greece will once again protest but ultimately comply," Mr McGrath said, in a note to investors.

"While the agreement between Europe and Greece potentially frees up some money to meet at least some of the pledges made by Tsipras before last month's election, the outcome would have been a relief for Enda Kenny and the Irish government, who aligned itself firmly alongside Europe's fiscal hawks during the standoff.

"Any debt concessions granted to Greece would have reflected poorly on the Irish government's debt deal efforts over the last number of years, who opted for a middle ground deal, comprising of debt extensions with improved costs rather than a the more extreme approach that Syriza has thus far adopted."

Goodbody stockbrokers said despite the deal, Greece will remain a concern for the Eurozone. "It is now time to get down to the hard work of reform in the Greek economy," said Goodbody economist Dermot O'Leary.

Q&A

A deal at last. Is Greece no longer a problem then?

If only. The deal is a four-month extension to the country’s current bailout, a programme the Greeks want to ultimately renegotiate. Expect to be back again in the coming months reading about further friction as the extension runs out.

Is the deal complete?

Almost, hopefully. The Greek government has to draw up a list of reforms in return for the extension. They have to be approved by Eurozone finance ministers. It is expected that they’ll convene a conference call today to discuss. Some national parliaments also must ultimately approve the extension.

Is it a good deal for Greece?

In so far as it gives Athens a financial lifeline as its bailout runs out at the end of the month, yes. But, it’s hard to spin the deal in a positive light for the Greek government.  It swept to power vowing to end austerity and renegotiate the current deal. As recently as last week, it was resisting attempts to extend the current programme.

Irish Independent

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