Euro zone finance ministers pressed Greece on Thursday to speed up structural reforms and continue fiscal consolidation and privatisation to unblock more of the international loans that keep it afloat.
“A lot of progress has been made, also at social and political costs for the Greek society, and I think we fully acknowledge that,” the chairman of euro zone finance ministers Jeroen Dijsselbloem said after a meeting of the group.
“Yet the only way forward to strengthen economic perspectives, to strengthen competitiveness, is to follow up on what we agreed, on the commitments that we made to each other.”
Officials said Greece had to urgently step up progress on structural reforms, find a way to plug a fiscal gap in the 2014 budget, accelerate privatisation, overhaul its public sector and boost competition in product and services markets.
EU Economic and Monetary Affairs Commissioner Olli Rehn declined to say what the size of the fiscal gap in the 2014 budget was, but officials had earlier put it at 2 billion euros.
A team of officials from the troika of the International Monetary Fund, the European Commission and the European Central Bank visits Athens regularly to check on progress on its bailout commitments and decide whether to release subsequent loan tranches, without which Greece would default.
The latest inspection began in September but then paused, only to resume on Nov. 4 after Athens provided the lenders with information enabling them to discuss the financing of the 2014 budget. The talks have made no progress since then.
Dijsselbloem said the urgency of progress was political rather than financial as Greece would have enough cash until early next year.
“I think it is very important that the review is finalised as quickly as possible. As we stand now it’s going to be difficult to finalise it in time for us to take decisions in December,” he told a news conference.
“That’s where we stand at the moment and I’m worried about that. I’d like to see progress made.”
Greece has been kept afloat by a financial lifeline from the euro zone and the IMF since 2010, with 240 billion euros of loans pledged in exchange for spending cuts and reforms.
A senior euro zone official said on Tuesday the only deadline for Athens would be the date the country runs out of cash to pay back creditors and keep the state functioning.
After a six-year recession that wiped out 40 percent of household disposable incomes and sent unemployment soaring to almost 28 percent, the Greek people say they can take no more.
The coalition government argues it deserves some slack after making the biggest budget deficit reduction ever seen in the euro zone. Greece’s president said his country would not yield to international pressure to impose more austerity.
Meanwhile the finance ministers also agreed to allow Spain to exit an aid programme for its banking sector in January without drawing more European funds.
Spain last year took 41 billion euros of a 100 billion euro package of aid to rescue a number of banks that were crippled by bad loans from the collapse of a property and construction bubble and to form a so-called bad bank to dispose of property and loans whose value has plunged.
The rescue came as Spain’s borrowing costs soared and the country struggled to avoid following Greece, Portugal and Ireland into a full bailout for government finances.
“The overall situation of the Spanish banking sector has significantly improved, including the access to funding markets of Spanish banks,” the Eurogroup of euro zone finance ministers said in a statement.
Ireland also chose on Thursday not to take emergency credit lines as it exits a full rescue for its public finances.
Spain’s government must still sell off three nationalised banks, and may yet have to put more money into those to make them attractive assets for investors.
Brussels will continue to monitor Spain’s banking system and public finances every six months until it has paid off 75 percent of the aid.
Spain has implemented stricter banking regulations, passed reforms to make its economy more competitive and taken steps to cut the public deficit – all as conditions for the bailout.
On Wednesday, Spain’s parliament created an Independent Fiscal Authority that will oversee budgets and the deficit, which was the last outstanding condition on the aid programme to be met.
Spain banks’ borrowing from the European Central Bank fell in October for the 14th month in a row, after spiking to record high last year at the height of the country’s financial crisis.
While Spain has fixed its damaged banks and has just emerged from its second recession in five years, it still faces huge economic challenges, including an unemployment rate of 25 percent.