Troika agrees next step in Greek bailout deal

Wednesday 19 March 2014 21.44
The Greek bailout agreement comes as civil servants stage a two-day strike in Athens
The Greek bailout agreement comes as civil servants stage a two-day strike in Athens

The Troika has reached a basic agreement with Greece on the next steps forward for its rescue program in a long-delayed step that could free up fresh funds for Athens.

The International Monetary Fund, the European Commission and the European Central Bank said the Greek government was committed to keeping the bank sector healthy, one of the issues that had apparently held up the agreement for more than five months.

"The mission and the authorities agreed that the economy is beginning to stabilise and is poised for a gradual resumption of growth," the troika said in a statement.

"Fiscal performance is on track to meet program targets... The authorities are making progress on structural reforms to improve the growth potential and flexibility of the Greek economy."

They said the government is committed to doing all that is necessary to ensure it banks remain healthy and sufficiently capitalized in order to support an economic rebound.

But they warned that the banks still faced potential challenges to maintaining adequate levels of capital, "in particular, if the authorities and banks do not urgently and efficiently address the high level of non-performing loans."

"Swift recapitalization of banks will strengthen their balance sheets," they said.

The agreement was done at the staff level after a review mission to the eurozone member country that had been expected to conclude around last September.

The statement said the Eurogroup and the IMF executive board would likely review the agreement "in the coming weeks."

Approval would allow a fresh release of funds to Athens that will help it continue to bridge fiscal shortfalls while implementing more reforms required under the bailout program.

The troika first bailed out debt-riddled Greece in 2010 with a program worth €110bn.

When that failed to stabilise the economy, they agreed a much tougher second rescue in 2012 worth €130bn, plus a private sector debt write-off of more than €100bn.