Greece has “basically achieved” the objectives of the reforms required by its creditors and its eurozone partners will begin discussing possible debt relief for the country, according to European Commission head Jean-Claude Juncker.
“We are now at the time of the first review of the programme (to aid Greece) and the objectives have been basically achieved,” Juncker said in an interview published today in the Funke Mediengruppe newspapers in Germany.
Greece’s creditors carried out the review intended to evaluate progress on reforms by the Athens government as it hopes to unlock the next tranche of its 86-billion-euro ($95 billion) bailout agreed in July.
The Eurogroup, comprised of the 19 finance ministers of the euro area countries, is set to meet on Monday in Brussels and take up this review of Greek reforms.
They will also “start the first discussions about how to make Greece’s debt sustainable in the long term”, Juncker told the German papers.
Approval of the reforms is needed before any consideration of Greek debt relief, but despite months of talks, Greece’s reforms have yet to win the backing of all its creditors largely due to differences between the European Union and the International Monetary Fund, which has demanded more reforms.
Juncker’s comments come as Greek Finance Minister Euclid Tsakalotos called on his eurozone partners to back Greece’s reform package of cuts worth 5.4 billion euros, and to put aside the creditors’ call for 3.6 billion euros of additional measures.
“Any package in excess of 5.4 billion is bound to be seen by both Greek citiziens and economic agents, within and beyond Greece, as socially and economically counter-productive,” he wrote in a letter to the Eurogroup.
Tsakalotos warned of the price of a “failed state” if the crucial talks on Monday run aground.
At the same time IMF chief Christine Lagarde also addressed the Eurogroup in a letter, a copy of which was obtained by AFP, urging the ministers to take up the question of debt relief.
Lagarde stressed the need to revise down the goal of Greece achieving a primary budget surplus of 3.5 percent of GDP in 2018, saying it was “counterproductive” to expect Athens to meet the target.
But the IMF also said there were “significant gaps” in Greece’s reform offers.
Greece is under pressure as it faces a huge payment to the European Central Bank in July, with fears growing that Athens could default if the bailout funds do not come through.