Published: Dec 3, 2017 8:50 p.m. ET
NEKTARIASTAMOULI
ATHENS -- Greece and its international creditors reached a preliminary agreement on the measures Athens must adopt, thus paving the way for the disbursement of around EUR5 billion ($5.95 billion) in funds next month and bringing the country a step closer to the end of years of bailout regimes.
A delegation from the European Commission, the European Central Bank, the eurozone's bailout fund and the International Monetary Fund reached a technical agreement late Saturday with Greek officials. Eurozone finance ministers are widely expected to approve the measures in Brussels on Monday.
"The institutions' visit is completed, we reached a staff level agreement," Greek finance minister Euclid Tsakalotos told reporters after the last meeting. He added that the final review of the bailout will be completed by May or June, before the end of the program in August.
The measures, which are part of an up to EUR86 billion bailout package, aim to make Greece's economy, one of the eurozone's least competitive, more nimble. For instance, Athens has agreed to sell 40% of its state power company and has promised to reform its gas retail market. And in a country that is regularly paralyzed by union protests, it will make it more difficult for unions to strike.
Greece will also subject some government benefits to means-testing and will reform some regulation concerning bankruptcy procedures and nonperforming loans, measures that could help Greek banks reduce their enormous portfolios of sour debt.
For instance, the establishment of procedures to hold auctions of foreclosed collateral by Greek banks has been a key condition for the release of the latest tranche of bailout funds.
Notaries have been boycotting auctions of foreclosed properties due to security fears because of protests that left-wing groups often stage at court houses in opposition to the foreclosures. On Wednesday the notaries returned to the courts to participate in the auctions, as riot police kept protesters at bay and kick-started electronic auctions.
Greek banks, saddled with more than EUR100 billion in bad loans, or half of their total lending, aim to sell around 18,000 properties in 2018. Regulators are forcing the country's battered banks to reduce problematic loans by 40% in the next two years.
The crisis-struck country is finally on track to return to growth this year, after having been in recession for most of the past decade. The economy is expected to grow by 1.6% in 2017 and 2.5% in 2018, according to Greece and European estimates.
Greek lawmakers are now expected to approve the new package of measures by early January. That will clear the way for the payment of the next bailout tranche on Jan. 22 in the next Eurogroup.
Unlike previous bailout talks over the last several years, this round of negotiations was smooth. The Greek government hopes that by completing the review talks swiftly, it can accelerate talks on the terms of its exit from an eight-year-long bailout regime and push for talks on restructuring its around EUR319 billion in debt.
If creditors determine that Greece can live without bailout funds, the country will exit the current regime -- the third bailout since 2010 -- in August 2018. To exit from the bailout regime, Greece would need to be able to finance itself on international markets.
For that, it needs to build a buffer of around EUR12 billion to EUR15 billion ahead of the exit. Around EUR9 billion could be covered from bailout funds, while the remaining sum would have to be raised by issuing new bonds.
Greece tapped the international bond markets in July for the first time after three years. Last week it announced that it completed a voluntary bond swap of around EUR30 billion, aiming to boost its market liquidity.
The government plans to go ahead with three more issuances before the program ends. The first of the issuances, which is expected to be a seven-year bond, could come before Christmas or soon after the bailout disbursement early in 2018, according to officials.
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