November 21, 2018 / 11:49 AM / 8 months ago

EU Commission clears Greek budget, says needs to accelerate reforms

A Greek and a tangled EU flag flutter atop Greece's Financial Ministry in Athens, Greece, November 21, 2017. REUTERS/Costas Baltas

ATHENS (Reuters) - The European Union’s executive approved Greece’s first post-bailout budget on Wednesday, but said the country had to speed up reforms if it hoped to qualify for any future disbursements under debt relief measures.

The European Commission said it had adopted its first report for Greece under an enhanced surveillance framework put in place after the concusion of its bailout program in August.

But it said activation of some debt relief measures, agreed by euro zone finance ministers in June, would depend on how well Greece performed in the future when it was re-assessed.

Reuters quoted sources on Tuesday as saying the country might miss a tranche of profit returns on Greek bond holdings due to delays in the pace of privatizations.

However a Greek government official suggested that was premature, stating an overall assessment would be made by Dec. 31.

About 4.8 billion euros ($5.48 billion) of profits from Greek bonds held by the European Central Bank and other eurozone central banks are supposed to be channeled back to Athens by June, 2022, in semi-annual tranches, as agreed with lenders under its post-bailout agreement.

Linking the so-called ANFA and SMP profit returns to Greece’s post-bailout performance was seen as an incentive for Athens to remain committed on hard-won reforms adopted under the three bailouts worth billions.

The Commission said it concluded that the draft budgetary plan Greece presented for 2019 ensured compliance with its commitment to achieve a primary surplus of 3.5 percent of GDP.

“Progress with reforms in other areas is found to be mixed and the authorities will need to accelerate implementation to meet their objectives,” the Commission said in a statement.

Reporting by Michele Kambas and Lefteris Papadimas; Editing by Richard Balmforth

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