Greece must pursue urgent reform to tackle "explosive" debt levels

Mark Sands
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European Union Supporters Demonstrate In Athens As Eurozone Leaders Meet For Summit
Greece will meet with the IMF and Eurogroup officials again next month (Source: Getty)

GREECE will continue negotiations on how to cut its staggering debts after Eurogroup officials agreed yesterday to a new summit in March.

The country needs access to the latest tranche of its €86bn bailout from the International Monetary Fund (IMF) and the EU in order to meet debt repayments.

At the core of yesterday’s announcement to give Greece more time to negotiate is an agreement between the two groups and the Greek government, which has refused to reform pensions.

The IMF had warned Greece must undergo an overhaul of state pensions to meet a commitment of a surplus of 3.5 per cent of GDP before debt costs from 2018.

Read More: Greek bailout delay could result in re-rerun of 2015, says governor

The IMF has labelled current Greek debt levels as explosive, and said the proposed reforms would only produce a 1.5 per cent surplus and that income and labour market reforms were needed too.

But Eurogroup finance ministers insist the plans keep Greece on track for the 3.5 per cent target.

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The head of Eurogroup finance ministers Jeroen Dijsselbloem said: “There will be a change in the policy mix, moving away from austerity and putting more emphasis on deep reforms which is also a key element for the IMF.”

Dijsselbloem declined to comment on the scale of savings the new reforms would produce.

“I cannot put a number on it because the figures are still moving and some discussions on the figures are still ongoing, so the final figure of the size of this will have to be established during the review,” Dijsselbloem said.

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