The threat of a chaotic Greek exit from the eurozone has receded – for now. Eurozone finance ministers have agreed to extend Greece’s €172bn bail-out programme, which was due to expire today, for four months.
To secure the extension, Athens had to produce a list of reforms it plans to implement, which include bolstering the tax collection system, allowing privatisation to continue, and tackling early retirement in the public sector. Greek stocks jumped by 10% on news of the deal.
What the commentators said
Talk about “humble moussaka”, said Dominic Lawson in The Sunday Times. The government has been “humiliated”: the bail-out continues to be run by the International Monetary Fund, European Central Bank (ECB) and the EU. If the “troika” isn’t satisfied with Greece’s reform efforts, the money will be frozen. This is “exactly” what the left-wing populists in charge of Greece “swore [they] would never accept”.
Syriza had no choice, said Hugo Dixon on breakingviews.com. A bank run was gathering pace and without bail-out money national bankruptcy was looming. “The misery inflicted on an already suffering people would have been terrible.”
Still, Greece’s problems are hardly over, said Simon Nixon in The Wall Street Journal. It can’t get any more money before the reforms are delivered in late April and will need parliament’s backing in any case. “That can’t be taken for granted” given Syriza’s hard-left faction. Agreeing a longer-term debt relief deal could prove even harder than extending the current programme.
Reforms would boost growth and restore confidence that Greece may one day be able to shrink its debt pile, said The Wall Street Journal. But successive governments have lacked the will or political skill to push them through. Last week’s deal “doesn’t change this reality”. Greeks may continue to suffer the pain of cutbacks and tax hikes, but “experience none of the growth that supply-side reforms would bring”.