Greece and the Euro zone finance ministers have reached a deal on Friday night to extend the bailout loan program by four months, averting bankruptcy and keeping the troubled country in the the currency area for now. But although the deal ends weeks of uncertainty, the two sides still need months of negotiations before a clear situation.
The leftist Syriza government has time until Monday to submit a preliminary list of proposed economic reforms which will be the base of the talks till the end of April. The finance institutions will then provide a first view whether this is sufficiently comprehensive to be a valid starting point for a successful conclusion of the review, according to the Eurogroup statement.
This actually means that there are no fears of Greece quitting the euro zone until Monday evening because the Eurogroup could reject that preliminary list of reforms and everybody will be back to wondering whether Greece is in or out of the euro, says BBC.
Government spokesman Gabriel Sakellaridis said that Greece won time “as was perhaps the original political plan”, but Prime Minister’s wide support at home is based in the idea that the leaders finally getting tough instead of taking orders from Berlin. Actually, the four-month extension of the current bailout is something the Greek government swore it would never do, so the Germans won this round. Also, the agreement will further be monitored and enforced by Brussels, the IMF and the European Central Bank, the “troika” of international lenders hated by the Greeks, and the statement is all about the Greeks promising to “honor their financial obligations” and adopting measures to “guarantee debt sustainability”.
But there is also a breakthrough from the Greek side, as they can submit their own list of economic and financial reforms without the pension cuts and VAT rises they were resisting. So from the Greek point of view, the Euro zone gave green light to ease up on austerity, mostly because the Eurogroup also said the primary surplus of the economy will be determined taking account of the “economic circumstances”. And the leftist-led government think they no longer has to generate a 3 percent primary budget surplus. But of course the Germans could still veto Syriza’s proposing and start a fresh crisis.