Greece is on track to receive €2.8bn (£2.5bn) from its eurozone creditors by the end of October, after an agreement on Monday on the latest instalment of its multibillion-euro bailout.
A technical hitch will delay some money, but Greece and its creditors insisted this was not a problem.
Eurozone finance ministers agreed to release €1.1bn on Monday, after Athens was found to have complied with 15 reforms required for releasing the money. Ministers also gave the green light to releasing a further €1.7bn, although these funds will be held up for two weeks because of a “technical issue”.
“The money will come, don’t worry,” said Jeroen Dijsselbloem, the head of the Eurogroup, describing the delay as an unavoidable data-collection issue, not a political decision.
The €1.1bn is to be used for paying interest on debts, while the €1.7bn is earmarked for clearing debt arrears.
The agreement to release the money was welcomed by the Greek government, which secured an unprecedented third bailout, worth €86bn in August 2015, after nearly being forced out of the single currency. So far Greece has received €29bn in payments under the current bailout.
As he left the meeting in Luxembourg, the Greek finance minister, Euclid Tsakalotos, said it had been “a very good Eurogroup for Greece”, with unanimous agreement that Greece had completed the reforms. The delay in approving the €1.7bn was “a secondary issue”, he said, as Greece did not have any imminent debt repayments.
Both sides said the delay was unavoidable, because Greek officials have not finished collecting debt arrears data for September, a necessary step for unlocking the money.
The eurozone bailout fund, the European Stability Mechanism, is expected to approve the release of the €1.7bn at a board meeting at the end of October.
More than a year since it teetered on the brink of financial meltdown, Athens and its creditors are in regular talks over its compliance with the bailout terms.
The reforms, known as milestones in eurozone jargon, include very precise changes to pensions, energy markets and the running of Greece’s central bank and tax-collection agency. Six of the reforms concern privatisation of Greek assets, a vital condition of the July 2015 bailout deal.
Pierre Moscovici, the EU commissioner on economic and financial affairs, praised the government led by Greek prime minister Alexis Tsipras for its “tremendous work” in carrying out “difficult reforms for the Greek economy and society”. “Greece has made a lot of efforts,” said the French finance minister Michel Sapin. “I think we must recognise those efforts.”
But the question of easing Greece’s €311bn debt burden, worth 177% of GDP, hung over the meeting – but remained unresolved. “I am not going to reopen the debt discussions in the Eurogroup every month,” said Dijsselbloem, who chairs the meetings. Some ministers “are eager to do so. But I am not”, he said.
Disagreement over the long-term impact of Greece’s debt burden has meant the International Monetary Fund (IMF) has refused to say whether it will get involved in the current rescue programme. Eurozone countries, led by Germany and the Netherlands, are keen to keep the Washington-based fund involved, but the IMF is yet to sign up.
“The intention is for the IMF to be involved,” Dijsselbloem said. “That involvement would also be financial and that is the starting point of our discussion.”
A spokesman for the Washington-based fund told Reuters on Sunday that it had not yet decided whether to participate, but remained “fully engaged with the aim of reaching agreement on a programme that the fund can support”.
The fund has delayed getting involved in Greece’s third rescue, because it believes the fiscal targets set for Greece by the eurozone will never be achieved without debt relief. The EU maintains the Greek economy is recovering and has promised short-term measures to ease the burden of repayments.
Dijsselbloem struck an optimistic note, saying that growth and confidence were returning to the Greek economy.
Economists at the Organisation for Economic Co-operation and Development have forecast the Greek economy will grow during the second half of 2016, expanding to 1.9% GDP growth in 2017.
But the effects of the devastating six-year recession have been slow to dissipate. Unemployment remains the highest in Europe: 1.12 million people, 23% of the workforce, cannot find a job. Although young people are far more likely to be out of work, unemployment is rising for the over-55s, as older people are pushed out of the labour market in favour of younger, cheaper employees.
Greece is also grappling with the migrant and refugee crisis, with more than 60,000 people stranded in Greece, after a succession of Balkan and central European countries closed their borders last year. The OECD estimates the migrant crisis cost Greece 0.4% of GDP in 2015 and suggests this could rise this year.
