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Eurozone tries to avoid another Greek crisis

By on February 20, 2017

BRUSSELS — The eurozone’s 19 finance ministers have agreed that officials from the institutions overseeing Greece’s bailout will return to Athens to discuss in more detail the reforms it must make.

Prior to the meeting in Brussels, the eurozone’s top official, Jeroen Dijsselbloem, said he hoped there will be agreement on sending back to Athens representatives from the institutions overseeing Greece’s bailout back to Athens. Afterwards, he said that they will work with Greek authorities on an additional package of structural reforms by the cash-strapped country.

A street vendor carries baskets as other pedestrians walk at a market area in Athens, Monday, Feb. 20, 2017. Greece remains dependent on bailout loans from its partners in the eurozone to pay its debts and protect it from bankruptcy and a potential exit from the euro. (Thanassis Stavrakis/AP)

A street vendor carries baskets as other pedestrians walk at a market area in Athens, Monday, Feb. 20, 2017. (Thanassis Stavrakis/AP)

As part of its most recent bailout agreement struck in July 2015, Greece committed to a series of economic reforms in return for the loans. There are a number of reforms still to be carried out, including to pensions, tax and the labor market.

Agreeing on a package of measures involving the tax system, pensions and labor market will help unfreeze more loans for Greece from its bailout program.Greece remains dependent on bailout loans from its partners in the eurozone to pay its debts. It has a debt repayment hump in July, and without new loans, it faces bankruptcy and a potential exit from the euro this summer.

Dijsselbloem also said there was agreement to shift the focus of the policy mix away from austerity to deep reforms. That has been one of the calls of the International Monetary Fund.

The IMF was meant contribute to the latest bailout program but has held off, saying that Greece’s debt is unsustainable and the eurozone needs to write off some of its loans. The Europeans are hesitant, leaving the IMF’s position in the balance.

“The position of the IMF remains unchanged under the principle that they formally want to join this program, while informally, they continued to be involved,” Dijsselbloem said. “It is still their intention but their condition is that there are enough substantive reforms – not necessarily cuts, but reforms – so that things improve in Greece.”

 

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