Greece on course for bailout as creditors accept economic reform plan

Greece is on course to secure its four-month bailout extension, with its economic reform plan being cautiously accepted by creditors. The list of measures was submitted just ahead of a midnight deadline last night to Eurogroup president Jeroen Dijsselbloem and representatives of the European Commission, the European Central Bank (ECB) and International Monetary Fund (IMF). The plans include a crackdown on smuggling, tax evasion and corruption. Proposals to tackle what is described as the country’s “humanitarian crisis” were also put forward alongside commitments they would not hurt its budget.

Creditors will be skeptical. These are notoriously difficult reforms and, in the case of the latter, usually cost money.

Megan Greene, chief economist at Manulife Asset Management.

The document contained a list of promises but offered little in terms of financial figures, prompting IMF chief Christine Lagarde to criticise it as “not very specific” though she said the Greek plan was sufficient to receive the aid programme. Among other areas of concern, she cited pensions and value-added tax policy as well as labour market reforms. With the bailout extension being approved in principle by finance ministers, the ECB and IMF the only remaining hurdle is a rubber-stamping exercise in the national parliaments of the 19-nation single currency area.

Red lines in negotiations cannot be crossed - that’s why they are red. If the Germans choose to push the issue to a rift, they will bring catastrophic consequences on themselves.

Greek Environment Minister Panagiotis Lafazanis

World Greece reforms