Eurozone ministers give Greece one more week for reforms

Eurozone finance ministers urged Greece on Monday to deliver on overdue reforms within a week in order to secure crucial funds from its bailout, as tensions resurfaced just months after Athens narrowly avoided a euro exit.

Jeroen Dijsselbloem, head of the Eurogroup of ministers, said “open issues” remained on commitments agreed by Greece in July as part of its rescue, and urged the leftist government of Prime Minister Alexis Tsipras to close the gap.

“The important thing is to get an agreement on those issues. This needs to be finished over the course of the coming week,” Dijsselbloem said after the meeting of the eurozone’s 19 finance ministers.

Creditors at the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) agreed an 86-billion-euro ($96 billion) debt rescue on July 13 but set tough conditions requiring Athens to cut spending, raise taxes and modernise the economy.

The most urgent differences dividing Greece and its creditors are over home foreclosure rules and the governance of ailing banks.

“The Eurogroup called on the Greek authorities to finalise the financial sector measures, as well as the legislation agreed under the first set of milestones, in the course of the week,” a statement by the Eurogroup said, referring to dozens of reforms included in the bailout.

“This would unlock the disbursement of two billion euros by the ESM (rescue fund) and a transfer of the funds needed for the recapitalisation of the Greek banking sector,” the statement added.

The Tsipras government insists any reform on foreclosures should protect low-income homeowners from house seizures, but the two sides disagree on the modalities of granting such an exception.

If Greece delivers on the reforms it gains access to the 10 billion euros already set aside to recapitalise Greek banks that were punished by capital controls at the height of the crisis this summer.

After the talks Greek officials said in a note from Athens that the talks “confirmed the positive climate of recent days”, adding that it expected a resolution on the payouts “in the coming days”.

In the talks, Eurozone ministers carefully avoided the finger-pointing that marked the six months of bitter talks that led to the bailout.

Germany’s powerful Finance Minister, Wolfgang Schaeuble, however drew a more negative tone warning that Greece had failed to meet “a great number” of commitments agreed to in July.

“It is exclusively for Greece to implement what we agreed upon last July,” a stern Schaeuble said in Brussels.

– Debt relief ‘infinitely harder’ –

France, which has mostly backed Greece throughout the torrid bailout process despite the disagreements, warned that eurozone countries should refrain from treating Greece unfairly.

“Greece has made considerable efforts (that are) all within the bailout agreement of July 13”, said French Finance Minister Michel Sapin on Monday.

“It’s a bit strange that we’re always asking more of Greece than what exists in creditor countries,” he said.

Greece’s two earlier bailouts, in 2010 and 2012, totalled 240 billion euros and more than 100 billion more in a private sector debt write-off, but Athens struggled to meet the stringent austerity and reform conditions.

The current delay in reforms has put off the even more sensitive debate over reducing Greece’s massive debt pile, another key component of the bailout.

The IMF has said it will stay out of any further rescue of Greece if the country’s debt is not scaled back, but harder line countries such as Germany are loath to offer Athens any favours.

The Greek economy took a massive hit in July after Athens brought in capital controls in response to a looming bank run.

A stress test on Greece’s banking system revealed earlier this month that lenders needed 14.4 billion euros to survive potential economic shocks.

“The recapitalisation of the banks… is our key priority,” Dijsselbloem said.


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