Greece agrees to bailout reforms compromise

[BRUSSELS] Greece on Monday agreed to discuss new bailout reforms in a bid to break a deadlock with its EU-IMF creditors that has sparked new fears that the country will crash out of the eurozone.

Officials will return to Athens shortly for talks aimed at reaching a deal to free up fresh funds, Eurogroup chief Jeroen Dijssebloem said after talks in Brussels.

"I'm very happy with that outcome today," Mr Dijsselbloem, the Dutchman who heads the Eurogroup of 19 eurozone finance ministers, told a press conference.

But the IMF, which is staying out of Greece's huge 86-billion-euro (S$129.4 billion) bailout agreed in 2015 until it gets more guarantees, said more work was needed.

Austerity-hit Greece's eurozone and International Monetary Fund lenders have been locked for months in a standoff over debt relief and budget targets.

The deadlock has spooked markets with fears of a return to the crisis two years ago when Greece nearly crashed out of the euro, the European single currency.

Athens needs the latest tranche of bailout cash to meet seven billion euros of new debt payments in July or risk defaulting on its loans.

Concerns are that a long series of elections, starting with the Netherlands in March and France in April, could delay matters dangerously.

But the talks have been on hold since December when creditor officials left Athens after failing to sign off on the second review of Greece's bailout.

Mr Dijssebloem said the officials would now go back to Greece "in the very short term".

"They will work with the Greek authorities on an additional package of structural reforms of the tax system, pension system and labour market regulation," he told reporters.

At the talks in Brussels, Greek finance minister Euclid Tsakalotos approved reforms that will be automatically triggered if Athens fails to meet budget targets, European sources told AFP.

But Greek government spokesman Dimitris Tzanakopoulos insisted that it was "deal reached without any extra austerity", after three bailouts that have brought Greece to its knees.

"The Greek side agrees to legislate the reforms which will take effect from January 1, 2019," a Greek government source said on condition of anonymity.

But the deal will include an "inviolable" clause that there will not be "one single euro more of austerity", the Greek source said.

The measures must still be approved by the Greek parliament, most likely in mid-March, a step that has caused problems in previous deals.

Germany's powerful finance minister Wolfgang Schaeuble said earlier he was confident the International Monetary fund would continue to participate in the bailout.

"I am working on the principle that the (creditor) institutions now have a common position," Schaeuble said as he arrived.

German Chancellor Angela Merkel meets IMF chief Christine Lagarde and European Commission head Jean-Claude Juncker in Berlin on Wednesday, in hopes of making further progress.

The Europeans have been at loggerheads with the IMF over the Washington-based lender's demands for easier budget targets and for Athens' mountain of debt to be reduced.

The IMF insists that budget targets demanded of Greece by the Europeans are too ambitious.

But if the eurozone is going to stick with its plans, then the IMF has demanded what it sees as the necessary tax hikes and pension cuts to meet them before it will lend further to Athens.

Greece, led by leftist premier Alexis Tsipras, had refused the further tightening of the screws, calling it an unfair addition to what he has already delivered.

Meanwhile eurozone hardliners led by Mr Schaeuble refuse to back down on the IMF's call for debt relief, while insisting at the same time that the IMF stay on board with the bailout.

The stakes could hardly be higher as the last such crisis, which followed Mr Tsipras's election, nearly saw Athens expelled from the euro.

The elections in Europe are adding to the pressure, with Mr Dijssebloem himself at risk of losing his job if the polls are right about his party's position.

Anti-EU candidates are leading polls in those elections and officials worry that Greece's future could get ensnared in the campaigning.

AFP