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Greece debt crisis: Eurozone backs reform plans

 Eurozone finance ministers have approved reform proposals submitted by Greece in order to obtain a four-month extension of its bailout.

Eurozone finance ministers have approved reform proposals submitted by Greece in order to obtain a four-month extension of its bailout.

The Eurogroup said it had agreed to begin national procedures - parliamentary votes in several states to give the deal final approval.

The measures offered by Greece include combating tax evasion and reforming the public sector.

But the head of the IMF said they lacked "clear assurances" in key areas.

Greece's debt stands at more than €320bn (£237bn), and its current €240bn bailout expires on Saturday. Fresh funding will not be released until Greece's proposals are approved in detail.

The stakes of talks over continued financial aid have been high because of fears of a Greek default that could push it out of the euro, triggering turmoil in the EU.

The main stock market in Athens rose by nearly 10% on Tuesday afternoon, hitting a three-month high.

'Serious enough'

The Eurogroup said in a statement: "We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions."

The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a "valid starting point".

The agreement had "averted an immediate crisis," said European Commissioner for Economic Affairs Pierre Moscovici.

"It does not mean we approve those reforms, it means the approach is serious enough for further discussion," he added.

However, International Monetary Fund (IMF) head Christine Lagarde expressed reservations about the reform proposals.

"In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens," she wrote in a letter to the Eurogroup.

"In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged."

The IMF, ECB and the Commission make up the "troika" of institutions that have managed financial rescue programmes for Greece since 2010.

'Perhaps too optimistic'

The four-month bailout extension was agreed on Friday after several rounds of talks, pending Greece's delivery of its reform proposals.

The deal was widely seen as a climbdown by Greek Prime Minister Alexis Tsipras. The newly elected leader of the left-wing Syriza party is trying to balance satisfying the demands of creditors with meeting his pre-election pledges.

His government wants to clamp down on tax evasion, corruption and inefficiency in order to fund social spending and alleviate what it calls Greece's "humanitarian crisis".

ECB head Mario Draghi noted that Greek commitments "differ from existing programme commitments in a number of areas". He said there would be a need to assess whether measures rejected by Greece were "replaced with measures of equal or better quality".

Eurogroup chairman Jeroen Dijsselbloem said the Greek government had a right to put its own "stamp" on the bailout programme.

"The new government is much more aggressive on taxes and corruption, and these are excellent things," he told Dutch radio.

"But the Greek government is perhaps too optimistic about the speed with which they can boost tax revenues."

Source: BBC

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