Greece and its creditors are working on reaching a final deal next week on the country exiting its international bailout this summer, the European Commission’s vice president said Thursday, adding that the bailout exit was “delicate yet perfectly doable.”
Speaking at a conference outside Athens, Valdis Dombrovskis said that “upfront debt measures” are needed to ensure Greece’s gradual return to borrowing on international bond markets as it leaves its bailout program.
His comments came as Greek lawmakers in parliament debated a bill to be voted on later Thursday introducing more creditor-mandated reforms, including on taxes, pensions and health care.
The repeated rounds of austerity measures have been met with frequent protests in Greece, whose economy has contracted by about a quarter since its financial crisis began in late 2009. Trade unions were planning demonstrations in Athens later in the day to coincide with the parliament debate and vote.
Greece is to emerge from its third and final bailout on Aug. 20, after eight years of relying on emergency loans from international creditors. In return, it has had to make repeated rounds of deep spending cuts, structural reforms and privatizations and its economy has been under strict supervision by creditors.
“Two months from now, Greece will complete its program,” Dombrovskis said. “It will be a delicate, yet perfectly doable exercise, provided that all parties show commitment and act responsibly.
The finance ministers of the 19-member eurozone are to meet on June 21, where Greece and its creditors are hoping to reach a final deal on the bailout exit.
Once it leaves its emergency loan program, Greece will have to finance itself by borrowing on international bond markets. The country has long sought some form of relief on the rescue loans it has to repay to its creditors, which are mainly fellow eurozone states.
“There needs to be an agreement on the debt measures,” Dombrovskis said. “Upfront debt measures would be important for ensuring Greece’s gradual return to the markets.” He also stressed the country must “stay the course of reforms” after it emerges from its bailout in order to ensure economic growth.
The Greek government has committed to continuing reforms after the end of the bailout, but has resisted the idea preferred by some, including the country’s central bank, of taking a so-called precautionary credit line — a backup loan it could use as it eases back into international bond markets.
A credit line would likely involve further stringent government austerity measures and heavier international oversight, which would make it politically unpopular. Instead, the government has insisted on a “clean exit” from the bailout.