Greek bailout: Athens' economic reforms accepted by its European creditors to the relief of those worst hit by the troubled nation's economic woes

Approved plan includes key Syriza pledges such as providing food stamps to the poor

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The Independent Online

The risk of Greece crashing out of the European single currency was alleviated today, as the struggling country’s economic reform proposals were given guarded approval by its European creditors.

Greek finance minister, Yanis Varoufakis, delivered a six-page letter outlining reform promises to the Eurogroup, made up of the 19 single currency finance ministers, as part of the bailout deal struck last Friday in Brussels.

The pledges ranged from a commitment to close tax loopholes to cracking down on corruption and curbing spending. After a telephone conference, the Eurogroup approved the reforms, meaning that Greece’s bailout will be extended for a further four months from 28 February, when it was due to run out.

Some hard line leftist members of the Greece’s Syriza Party under Prime Minister Alexis Tsipras have suggested that the country has betrayed its anti-austerity mandate by applying for an extension of the bailout. But the approved reforms included key Syriza pledges such as providing food stamps to the poor.

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Greek Finance Minister Yanis Varoufakis arriving for a ministerial meeting in Athens (Getty)

Mr Varoufakis, in his letter to eurozone finance ministers, made sure to include his government’s commitment to “fight against the humanitarian crisis ensuring it has no negative fiscal effect”. The move was welcomed, especially by the “Allos anthropos” volunteers in the Athens square of Monastiraki - all mainly unemployed or homeless. In the shade of the ancient hill of Acropolis, every Tuesday a team from the Allos Anthropos group prepares food for those in need. Around 140 plates of fakorizo, a traditional cheap Greek meal made of lentils and rice, were served today.

Five years into the economic crisis, poverty now touches over a third of Greeks, turning the coalition government’s priority to address the country’s “humanitarian crisis” into a welcome initiative across the debt-strapped country.

Left-wing Syriza had dedicated one of the four pillars of its pre-electoral economic manifesto into easing the plight of those worst hit by the financial woes.

 

Among other social welfare proposals, the “Thessaloniki programme,” as the manifesto is called, included provisions to hand out free electricity and food subsidies to 300,000 households living below the poverty line and subsidise rent in 30,000 flats.

Katerina Georgiou and her daughter have been living off her husband’s pension after losing her job as an accountant five years ago. Like most long-term unemployed Greeks – almost 19 per cent of the population in 2013 – she is excluded from receiving any welfare or unemployment benefits and is struggling to make ends meet.

“At least I still have electricity nor do I need to squat in old buildings for shelter like many do,” she said, pointing to a derelict house in nearby Monastiraki square.

Another volunteer, Dimitri, 40, lives with his mother after losing his job at a bank 14 months ago. They both live off her €716 monthly pension, hopeful it will not be further axed under new measures demanded by the international lenders.

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The Greek stock market surged following approval of the country's economic reforms (AP)

“If government achieves half of what they pledged, it’ll be a success but they need more time to prove themselves,” Dimitri said. “Tsipras is a rebel and he’ll do everything he can.”

Yiannis Klados, a volunteer of the community kitchen added: “We’re not solving the problem by filling the country with shelters and soup kitchens but by fostering real growth and giving people the chance to work and live in dignity.”

European share prices jumped on the news and Greece’s market borrowing costs eased, reflecting investors’ sense that the prospect of a “Grexit” had diminished.

The Greek stock market shot up by almost 10 per cent. Both the European Commission and the European Central Bank said the letter was “sufficiently comprehensive” to extend the rescue package. However, Christine Lagarde, the director general of the International Monetary Fund, gave a more cautious response. She welcomed elements of the plan but stressed that the letter failed to convey “assurances” on reform.

She said: “We note in particular that there are neither clear commitments to design and implement the envisaged comprehensive pension and VAT policy reforms, nor unequivocal undertakings to continue already-agreed policies for opening up closed sectors, for administrative reforms, for privatisation and for labour market reforms”.

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IMF managing director Christine Lagarde (AP)

Yet the agreement of the Eurogroup was the key decision. The proposed reforms include a “thorough spending review” for each government ministry and legislation to “broaden [the] definition of tax fraud and evasion”.

The bailout extension means Greece’s banks will continue to have access to emergency funding from the European Central Bank.

The outflows of deposits from Greek banks accelerated to €1bn a day at the end of last week as fears grew that Greece could become the first member to exit the eurozone.

However, the bailout extension still needs to be approved by national parliaments in Germany, Finland and elsewhere. And there are further months of fraught negotiations in store to secure a long-term successor to the bailout agreement by June.

The government will also continue to face difficulties in financing its activities and paying its maturing debts over the coming weeks because the European authorities have said they will release only the final €7bn tranche of bailout funding once they have seen evidence that the promised reforms are being delivered.

“Greeks have lots of heavy lifting to do until the end of April,” said the Slovak finance minister Peter Kazimir. “We all want to see numbers now.”

Grecian earners: The proposals

* Improve collection of VAT and fight evasion by utilising electronic technology

* Change the law to broaden the definition of  tax fraud and remove income-tax exemptions

* Thorough spending review of every ministry

* Review non-wage benefits expenditure across the  public sector

* Tackle early retirement in public sector

* Clamp down on smuggling of fuel and tobacco

* No reversal of privatisations

* Raise minimum wage “over time”

* Food stamps for the poor

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