EU Sees ‘Smooth Sailing’ If Greece Implements Needed Reforms

 Richard Bravo

 Matthew Miller

November 18, 2016 — 11:15 AM EET Updated on November 18, 2016 — 11:35 AM EET

Greece and the institutions managing its bailout, currently negotiating policy reforms in Athens, could clear the way for discussions next month to ease the terms of the nation’s debt burden, which could presage a successful resolution of its rescue program, according to the head of the euro area’s Economic and Financial Committee of finance deputies.
“You need to do the reforms and that will bring back growth and that will then unlock those measures which in reality we’ve already agreed on,” Thomas Wieser, head of the Euro Working Group, said in an interview with Bloomberg Television. “I’m very positive by the end of this year we’ll be there then it should be comparatively smooth sailing for the rest of the program.”



Greek Prime Minister Alexis Tsipras was elected to office in 2015 on the campaign promise that he would ease the nation’s debt load, which is still more than 170 percent of its economic output. But even as U.S. President Barack Obama called on Europe to relax its policy of austerity, German Finance Minister Wolfgang Schaeuble doused hopes of significant reductions earlier this week when he said Greece needed economic reforms, not debt cuts.
Greek bonds rose against a falling European market, with yields on the 4 billion euros of 4.75 percent notes due April 2019 dropping by 32 basis points to 6.9 percent at 11:20 a.m in Athens. That’s down from 10 percent in September.

The institutions have already agreed on measures to shield Greece from increases in interest rates. If euro-area finance ministers meeting on Dec. 5 reach an agreement on required policy reforms, which include labor market legislation and fiscal plans, “then all of these discussions around debt can be, I hope, finalized.”
Those talks would require participation by the International Monetary Fund, according to Wieser. The fund has already indicated that its involvement in the current Greek bailout is contingent on medium-term debt relief.
A precondition for debt talks “is it’s not only a European program it’s an IMF program as well, at least that IMF colleagues are ready to go to their executive board and suggest to them having another program with Greece,” said Wieser.