Greece's international creditors failed to agree Monday on how to get the country's bailout program back on track and put off again the release of the next batch loans that Athens is using to pay its day-to-day bills.
However, European finance ministers meeting in Brussels did decide to give
Greece two more years until 2016 to reform its economy - one of the conditions of its bailout package. But they could not agree on how to pay for the extension or when the country's debts would reach a manageable level.
"Today a huge step has been made in order to secure the program on Greece, in order to enhance the confidence on the eurozone, in order to find a strong and definite solution for this question, which has lasted for more than two years now," said French Finance Minister Pierre Moscovici, as he left the meeting of finance ministers from the 17 countries that use the euro. "We couldn't do more today."
The European Central Bank, the International Monetary Fund and the European Commission, which is the EU's executive arm, have twice agreed to bail out Greece, pledging a total of 240 billion euros in rescue loans. The country has received about 150 billion euros of those loans so far, in exchange for making tough budget cuts and sweeping reforms to its labor market and bureaucracy.
The main aim of the bailout program is to right Greece's economy and get it to a point where it no longer relies on international aid and can independently raise money on the debt markets. The bailout program was supposed to steadily reduce Greece's debt until, in 2020, it reached 120 percent of its annual gross domestic product- a level generally considered sustainable. But it's been clear for months now that the country is way off track from achieving that goal - although how far off track is a point of contention among its lenders.
As IMF chief Christine Lagarde left the meeting, she insisted that Greece should still be aiming to bring its debts to the 120 percent level by the original target of 2020. But Jean-Claude Juncker, who chairs the meetings of the eurozone finance ministers said that the deadline would likely be changed to 2022.
"What matters at the end of the day is the sustainability of the Greek debt, so that country can be back on its feet and re-access the private market in due course," Lagarde said.
The question of debt sustainability is as important as it is divisive: If Greece's debts can't be reduced to a level where the country can pay them down, then the billions of euros in bailout loans given to Greece will have been wasted.
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