Greece cedes to reform demands to snap bailout impasse

The eurozone's top official acknowledged progress in Greece's latest bailout talks with creditors but said a comprehensive deal would not be secured at a meeting of the single currency bloc's finance ministers on Friday.

However, there is no scheduled date for new payments to Athens, which raises doubts about Greece's ability to repay creditors in July. However, while the cuts are automatic, the countermeasures will only be implemented if Greece meets its fiscal targets.

An agreement among eurozone ministers would go a long way towards getting the International Monetary Fund on board as a financial partner in the bailout, a major demand of Germany, Greece's biggest lender.

For months, the bailout discussions have stalled amid disagreements over what reforms, including to pensions, tax and the labour market that Greece should take in order to get the rescue money due from its most recent global rescue.

The Greek government has agreed Friday to institute new measures worth of 2 percent of gross domestic product by the end of the decade - after the country exits its third bailout program.

For months, the bailout discussions have stalled amid disagreements over pension, tax and labour market reforms that Greece should take in order to get the rescue money due from its most recent global rescue.

Eurozone chairman Jeroen Dijsselbloem said that "the good thing is that we have achieved results" over the past days.

The new reform package, we are told, is supposed to help Greece reach its 3.5% budget surplus target by 2018 and maintain it over the "medium term".

Still, even once the creditors return to the Greek capital, other technical issues, including reforms to the energy sector, will also need to be agreed on before the review can be completed.

A "policy" agreement is expected to be announced on Friday afternoon following the Eurogroup meeting of eurozone finance ministers in Malta, sources close to the talks said. Dijsselbloem also said that Athens will be allowed to introduce unspecified "expansionary countermeasures" to soften the social and political impact of the controversial reforms in pensions and taxes.

The agreement included a commitment to make economic reforms, including making the tax base wider and unpopular cuts to pensions 2019 and 2020. Though helping to put the public finances on a surer footing, the measures came at a cost - the Greek economy lost a quarter of its output.

  • Joanne Flowers