Troika raises fresh concerns over Greece's last-ditch debt deal

By Bruno Waterfiel in Brussels and Mehreen Khan 24 February 2015

Creditors warn they will require more from Athens if it is to be granted a €7.2bn bail-out extension before the end of the month

Greece's long-term future in the Eurozone still hangs in the balance Photo: AFP

The International Monetary Fund and European Central Bank have warned that Greek government reforms are not enough to unlock the vital funding needed to keep the country afloat.

In order to prevent a bankruptcy and default on March 1, Eurozone finance ministers approved a six-page list of proposals from Athens as a “valid starting point” for negotiations to take place over the next five weeks.

The “Troika” of the European Commission, ECB and IMF will now begin a review of Greece’s implementation of austerity measures, which is due to conclude in April.

“The institutions provided us with their first view that they consider this list of measures to be sufficiently comprehensive to be a valid starting point for a successful conclusion of the review,” said a Eurozone statement.

Related Articles

• Greece bail-out deal approved by creditors - as it happened 24 Feb 2015

• Tensions high as Greece scrambles to keep rescue deal alive 23 Feb 2015

• Greece leads Eurozone's slide into deflation 24 Feb 2015

Greece’s Syriza-led government appears to have conceded many of its Leftist election promises in order to daw up the 66-point plan billed by Yanis Varoufakis, the Greek finance minister, as “a first comprehensive list of reform measures”.

But in a blow to the government, which faces a potential domestic backlash for bowing to Eurozone conditions, both the IMF and the ECB reminded Athens they held a veto over providing further cash and could yet demand more concessions.

Christine Lagarde, the director of the IMF, warned the Greek plan lacked “clear assurances that the government intends to undertake the reforms envisaged in the memorandum on economic and financial policies”. The Memorandum was signed by Athens in return for loans to prop up its banks and public finances.

Writing to the Euro group, Ms Lagarde said the IMF would still require “clear commitments” on tough pensions, VAT, privatisation and labour reforms - measures Syriza pledged to scrap or oppose during elections that swept them into power last month.

“We consider such commitments and undertakings to be critical for Greece’s ability to meet the basic objectives of its fund-supported programme,” she wrote.

Mario Draghi, the ECB’s president, added his voice to the IMF's doubts. He said Greece still faced a series of difficult negotiations before the central bank would restore normal borrowing rights for Greek lenders - a right it took away earlier this month.

“We note that the commitments outlined by the authorities differ from existing programme commitments in a number of areas,” wrote Mr Draghi in a letter to Eurozone finance ministers.

“In such cases, we will have to assess whether measures are replaced with measures of equal or better quality in terms of achieving the objectives of the programme.”

Tracked changes on documents submitted by Athens at midnight on Monday showed the Commission had worked closely with Mr Varoufakis in drafting the plans. Syriza's proposals to overhaul its tax system and state revenue measures now closely resemble promises made by past Greek governments.

While pledging a “thorough spending review” for the public sector, the blueprint did not include any estimates on the costs, savings or added revenues the Eurozone is likely to demand Athens finds in order to offset spending on pensions and raising the minimum wage.

Troika officials will also demand much more detail on promises to carry out labour market reforms and commitments not to “roll back privatisations that have been completed”.

Conservative German MPs will also seek assurances on the measures when the Bundestag votes to extend the EU-IMF programme on Friday.

As well as pressure from its creditors, Greece’s Syriza-led coalition faces internal dissent from Left-wing MPs who accuse Prime Minister Alexis Tsipras of betraying voters opposed to Eurozone austerity.

Costas Lapavitsas, a Syriza MP and former professor of economics at London’s School of Oriental and African Studies, accused Mr Tsipras of reneging on promises made in his party’s election manifesto and dropped in the latest reform plan.

“Those who have been elected on the basis of the Syriza programme, and believe the promise as our commitment to the Greek people, have deep concerns,” he wrote on his blog.

Troika raises fresh concerns over Greece's last-ditch debt deal - Telegraph