Euro zone approves extension of Greek bailout

Alkis Konstantinidis | Reuters A European Union and a Greek national flag flutter in front of the Parthenon temple in Athens February 11, 2015.

Alkis Konstantinidis | Reuters
A European Union and a Greek national flag flutter in front of the Parthenon temple in Athens February 11, 2015.

The euro zone’s finance ministers approved Greece’s new bailout plan Tuesday, after Athens submitted reform proposals in the 11th hour.

The Eurogroup’s green light sent Greek government bond yields sharply lower. By 14:30 GMT the Greek 10-year yielded 8.675 percent, down from 9.568 percent on Monday. The Athens stocks exchange, meanwhile, was trading 8.8 percent higher.

The approval will pave the way for the final instalment in Greece’s bailout to be paid, and allow it and its official creditors to proceed with discussions for a new program over the next four months.

The International Monetary Fund (IMF), another of Greece’s major creditors, also gave its approval to the plan in a letter.

IMF Managing Director Chrisitne Lagarde wrote that the Greek plan, “covers the broad topics that should be on the new Government’s agenda.” But she added that there were no “clear assurances” on certain key areas, like comprehensive pension and sales tax reform.

European Union Economics Commissioner Pierre Moscovici told reporters Tuesday that individual euro zone member states now had to give the plan the green light, with Germany set to debate the issue on Friday.

Just in time

It comes after Greece’s Finance Minister Yanis Varoufakis sent a list of reform proposals to the euro zone at around midnight on Monday, just making a deadline set by its international creditors.

The measures included plans to combat tax evasion and corruption, reform tax policy, consolidate pension funds and eliminate incentives for early retirement. In addition, Athens promised to review and control public spending, and made commitments not to roll back privatizations that have been completed.

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