Cyprus Mail

Greece gets positive reform review from EU exec, Germany still sceptical

The European Commission gave Greece a positive review of its reforms on Monday, paving the way for the disbursement by the eurozone of a €2.8bn loan.

Germany, which habitually takes a hard line, remained sceptical, suggesting that not all required reforms were carried out.

To get the money, Greece was supposed to take 15 reform actions, called milestones, the last of which were completed over the weekend. The institutions assessing the reforms are the European Commission, the European Central Bank, the eurozone bailout fund ESM and the International Monetary Fund.

“We are going to give an assessment saying the 15 milestones, all of them, are now completed,” European Commissioner for Economic and Financial Affairs Pierre Moscovici told reporters on entering a meeting of eurozone finance ministers in Luxembourg.

“This should normally open the way to the disbursement of the remaining €2.8bn. As often in the Greek issue, things are done a bit at the last minute, but they are done,” Moscovici said.

But EU officials said that some countries, especially Germany, argued Greece still needed some more work to complete the milestones, mostly regarding making the privatisation fund fully operational. This could delay a decision on the full disbursement of the €2.8bn tranche, the last of the so-called first review of Greece’s aid programme.

Apart from paying out the money, much of which will go to pay Greek government arrears, the completion of the 15 reforms means that Greece will be able to start the next stage of the reform process, called the second review, which is a condition for a start of talks on the scope of Greek debt relief.

If Athens completes all the actions from the second reform review by the end of the year, it could begin negotiations on the terms of medium- to long-term debt relief from the eurozone — an important political victory for the government.

Eurozone finance ministers agreed in May to start discussing the scope of such debt relief, to be delivered only in 2018, once a new debt sustainability analysis for Greece is prepared by the IMF in December.

“If we have the second review completed, then before the end of the year it would mean the Greeks have met their responsibilities and the eurozone must also take their responsibilities and be available for a discussion on debt,” Moscovici told Reuters on Saturday.

Eurozone ministers, who are now the main creditors of Greece after the country restructured privately-owned debt in 2012, agreed in May that the guiding principle for debt relief, once all reforms are delivered, would be to cap Greece’s gross financing needs at 15 per cent of GDP in the medium term and at below 20 per cent in the long run.

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