Greece’s bailout inspectors are returning to Athens to seek changes to the country’s tax, pensions and labour market laws in a sign that the Greek prime minister, Alexis Tsipras, will give way to European pressure for deeper reforms.
His government agreed at a meeting of eurozone finance ministers on Monday to talks on big economic reforms in exchange for progress on releasing the next instalment of bailout funds. In return, Europe signalled a winding back of austerity measures for the struggling nation, in a move that could end a dispute between EU creditors and the International Monetary Fund over how to deal with Greece.
But the announcement sparked anger in Greece, where the main opposition party accused the government of caving in while the economy was weak.
“The government is celebrating the return of the institutions to Greece while the economy is sinking,” said the centre-right New Democracy group.
Senior EU officials promised economic pressures would be lifted. Pierre Moscovici, the European commissioner for economic affairs, said: “We need to show [the Greek people] that there is light at the end of the tunnel of austerity. Everyone has agreed on this fundamental principle.”
Officials from the European commission, the European Central Bank, the IMF and the European Stability Mechanism (EU bailout fund) will arrive in Athens “in the very short-term” to work with the Greek government on reforms to tax, pensions and labour markets, said Jeroen Dijsselbloem, the Dutch finance minister who chairs the Eurogroup.
Speaking after the meeting in Brussels, he said it was too early to make a decision on unlocking the next tranche of Greece’s €86bn (£73bn) bailout, but he hoped agreement on reforms would make a disbursal of funds possible. Greece was represented at the meeting by its finance minister, Euclid Tsakalotos.
The return of the creditors to Athens has raised hopes they will agree among themselves on how to handle Greece’s debt mountain. The IMF has so far declined to get involved in the latest bailout because it believes that refusing to write off some of the Greek debt burden will crush Greece’s economic prospects. In contrast, the EU institutions argue that deferring repayment terms – rather than waiving payments – will allow the Greek economy to grow and pay its dues.