Greece passes key debt test but still nervy

City A.M. Reporter
International inspectors yesterday applauded Greece’s efforts to exit its debt crisis, endorsing a fresh €9bn (£7.4bn) payment from an EU/IMF bailout scheme, but urged reforms in energy, banking and the public sector.

In their most positive assessment so far that offered an antidote to market scepticism, IMF, ECB and European Commission officials said Athens would likely meet this year’s deficit cutting target, though risks remained.

“This was a very ambitious programme with a lot of front-loading, and the good news is that it is being implemented as agreed,” the IMF’s mission chief for Greece Poul Thomsen said.

Officials from the so-called “Troika” told reporters at the end of an inspection visit ahead of the release of the second tranche of the €110bn programme in September they now sought reforms in energy, banking and the public sector.

“Despite considerable progress on a very vast array of areas, key challenges and risks remain,” said Servaas Deroose, deputy director general for economic and financial affairs at the European Commission.

Commenting on the assessment by the international inspectors, European Central Bank President Jean-Claude Trichet said at a news conference in Frankfurt, “It doesn’t mean that a very hard job should not continue to be done.”

Reforms were crucial to restore investor confidence and allow Greece to return to international bond markets some time next year as planned, he said.

Deroose said Athens must come up with a plan to free up the energy market by the end of the year, adding the banking sector also needed restructuring. He said the government was preparing a strategic review of lenders in September.

Greece’s debt crisis has shaken the Eurozone and effectively blocked Athens from markets.