February 21st, 2015 by James
On Friday, the finance ministers of euro zone agreed in principle to extend Greece’s financial rescue by four months. This decision averted a potential cash crunch in March that could have forced Greece out of the currency area.
The deal, which is to be ratified once creditors of Greece are satisfied, ends weeks of uncertainty since the election of a leftist-led government in Athens that pledged to reverse austerity. “Tonight was a first step in this process of rebuilding trust,” Jeroen Dijsselbloem, chairman of the 19-nation Eurogroup, told a news conference. “We have established common ground again to reach agreement on this statement.”
The agreement provides a breathing space for the new Greek government to help it negotiate longer-term debt relief with its official creditors.
European Union paymaster Germany, Greece’s biggest creditor, has asked for “significant improvements” in reform commitments by Athens before it would accept an extension of euro zone funding.”Being in government is a date with reality, and reality is often not as nice as a dream,” German Finance Minister Wolfgang Schaeuble told reporters. He stressed Athens would get no aid payments until its bailout program was properly completed.
“The Greeks certainly will have a difficult time to explain the deal to their voters,” the conservative veteran said.
The accord requires Greece to submit a letter by Monday to the Eurogroup listing all the policy measures it plans to take during the remainder of the bailout period. Euro zone member states will ratify the extension, where necessary through their parliaments if the European Commission, the European Central Bank and the International Monetary Fund are satisfied.