Greece says bailout deal, Juncker warns it is ‘on shaky ground’

'The review will be completed and it will be completed positively' - Greek PM Alexis Tsipras

11 February 2017, 5:51pm
Greek Prime Minister Alexis Tsipras expressed confidence that the drawn-out bailout review with international lenders will end well, but warned them not to heap any fresh burdens on his country.

However, European Commission President Jean-Claude Juncker warned that the deal was on “shaky ground” because the International Monetary Fund has not yet decided what role it will play.

Greece and its international lenders on Friday made clear progress towards bridging differences over Athens’ fiscal path in the coming years, moving closer towards a deal that would secure new loan disbursements and save the country from default.

“The review will be completed, and it will be completed positively,” Tsipras told a meeting of his Syriza party on Saturday. “We are ready to discuss anything within the framework of the [bailout] agreement and within reason, but not things beyond the framework of the agreement and beyond reason. We will not discuss demands which are not backed up by logic and by numbers.”

He warned all sides “to be more careful towards a country that has been pillaged and people who have made, and are continuing to make, so many sacrifices in the name of Europe”.

In an interview to be aired on German radio Deutschlandfunk on Sunday, Juncker praised Greece for some of the steps it has already taken but warned that Greece’s third bailout programme could fall apart as the IMF has not yet made up its mind whether to provide more aid.

“Yes, it is on shaky ground as we don’t see how the IMF could manage this problem,” he said.

Greece has only recently emerged from a multi-year recession brought on by a debt crisis and the consequent austerity policies demanded in return for the bailouts. Greece’s unemployment rate stands at 23% and while year-on-year GDP growth was 1.8% in last year’s third quarter, the economy contracted at a rate of over 10% earlier in the decade.

The IMF has sat on the sidelines of the latest bailout program and says it cannot participate in a programme which could keep Greece in a never-ending cycle of indebtedness that could push national borrowing to 275% of economic output by 2060.

Reaching an agreement would release another tranche of funds from its latest €86 billion bailout, and facilitate Greece making a major €7.2 billion debt repayment this summer.

The European and IMF lenders want Greece to make €1.8 billion - or 1% of GDP - worth of new reforms by 2018 and another €1.8 billion after then and the measures would be focused on broadening the tax base and on pension cutbacks.

Representatives of Greece's lenders are expected to return to Athens this week to report on whether Greece has complied with a second batch of reforms agreed under the current bailout.