Eurogroup President Jeroen Dijsselbloem has announced a policy move away from austerity for Greece with a renewed emphasis on reforms instead.
Dijsselbloem made the surprise announcement after Monday’s meeting of Eurozone finance ministers but warned there was still a lot of work to be done.
"There will be a change in the policy mix, if you will, moving away from austerity and putting more emphasis on deep reforms," he said in a joint press conference with European Commissioner for Economic and Financial Affairs Pierre Moscovici and re-elected Managing Director of the European Stability Mechanism (ESM) Klaus Regling.
Dijsselbloem confirmed that the troika, aka ‘the institutions’ will return to Athens and work with Greek authorities on an additional package of structural reforms involving the tax system, pension system and labour market regulation.
"We have to realise that there is no political agreement at this point that would be too early. It's a very positive and good step that the institutions have enough confidence and a common agreement to go back to Athens.
"Then we will have a final political discussion on the later stages of the programme and how to move forward.
"If we want economic growth in Greece to continue and to start picking up, confidence is a key factor. That confidence has been returning in the past year and needs to strengthen and we don't want to jeopardise that, so that will be a strong motivator to do the work as soon as possible," he said.
On his part, European Commissioner for Economic and Financial Affairs Pierre Moscovici said the Greek people need to see a "light at the end of the tunnel of austerity."
"The further fiscal measures for the period immediately following the programme will serve to reassure all partners of Greece's commitment to maintaining sound fiscal policy in the future.
"We still need to narrow our differences in terms of fiscal projections and we still need to agree on all details of the policy package to conclude the second review. But as I always have said, where there is a will there is a way and today we have seen clearly that the will is there," he noted.
"In terms of labour market measures, we will work to swiftly finalise our common understanding. We also stand ready to support Greece in its efforts to roll out active labour market policies and to explore how best to provide the necessary financing for this and the Commission is clearly committed to help the Greek authorities in that direction," he said.
Moscovici highlighted the progress Greece has made in economic and budgetary terms, saying this was now recognised by all stakeholders and cited fiscal data and economic projections, said that Greece had surpassed both growth forecasts and programme targets, and that with returning confidence was projected to achieve 2.7% of GDP growth for this year and 3% next year.
"It is now evident that Greece has significantly over-performed its 2016 primary surplus target, it's likely to achieve a surplus of at least 2 pct of GDP compared to the programme target of 0.5%. If this is confirmed by Eurostat in April, this means that Greece's primary surplus has already surpassed ints 2017 target of 1.75%t of GDP and is already well on the way to meet its 2018 global goal," Moscovici pointed out.
The Greek government seized on the opportunity of the new arrangement with creditors, emphasising it will not contain a single euro of additional austerity.
“All sides accept and recognize the exceptional performance of the Greek economy and this is the reason we managed to reach an agreement with structural reforms as its main outline, which will not have even one euro of budgetary impact – that is, not a single euro of additional austerity,” said government spokesperson Dimitris Tzanakopoulos.
