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Financial News: Greece Agrees New Bailout Reforms To Secure Aid

Greece Agrees New Bailout Reforms To Secure Aid

02/21/2017 - 02:43:00 (RTTNews)

(RTTNews) - Greece and its lenders reached an agreement on Monday to allow a team of experts to work out structural reforms for the country's tax and pensions systems, and also labor market regulation, thus easing a crucial standoff between the government and its global creditors that had raised fresh concerns over a possible exit of the country from the euro area.

The team of officials from the European Union, the European Central Bank and the European Stability Mechanism will go back to Athens in a "very short time", Eurogroup President Jeroen Dijsselbloem said after a meeting of Eurozone finance ministers in Brussels on Monday.

"There will be a change in the policy mix, moving away from austerity and putting more emphasis on deep reforms, which has also been a key element for the IMF," he said.

Calling the latest progress "a good step", Dijsselbloem stressed that there was yet to be a political agreement, as that would be too early.

"It is a very positive and good step that the institutions have enough confidence and a common agreement to go back to Athens," he added.

Meanwhile, the International Monetary Fund, which thus far has not financially contributed to the current EUR 86 billion bailout agreed in 2015, said more progress was needed.

The country is in dire need of bailout cash to meet debt repayment of more than EUR 7 billion due in July, or risk default.

"There is no liquidity issue in the short run for Greece," Dijsselbloem said.

Discussions over the release of the next bailout tranche stalled after a review mission to Athens returned in December without reaching a deal.

The IMF and the EU differ over the kind of structural reforms needed to help the Greek economy. The former seeks an immense overhaul of the pension system, which the government has refused, while the latter says the reforms thus far has been enough and that the economy is on the path of sustainable growth.

In its latest assessment of Greece, the IMF said the economy is set to expand just below 1 percent in the long term and the government could attain the primary fiscal surplus target of around 1.5 percent of GDP.

The IMF report also said Greece may need further relief to restore debt sustainability, despite enormous sacrifices and European partners' generous support.

The EU will work tirelessly to have a staff level agreement as soon as possible, European Commissioner for Economic Affairs Pierre Moscovici said.

There should be an agreement that is both demanding and balanced and there really should be "a light for the Greek people at the end of the austerity tunnel", he added.

The European Commission estimates that Greece achieved a 2016 primary surplus of at least 2 percent of GDP in 2016, well exceeding the program target of 0.5 percent.

"If this is confirmed by Eurostat in April, it would also mean the primary surplus has already surpassed its 2017 target of 1.75 percent of GDP and is already well on the way to meet its 2018 global goal," Moscovici noted.

"We need to nurture and we need to strengthen this progress."

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