Eurozone approves Greek economic reform plans and paves way to bailout extension

Eurozone ministers have approved Greek proposals for economic reforms, bringing Athens a step closer to extending its bailout by another four months.

The European Commission announced the news in the afternoon on 24 February, following a 90-minute teleconference call between eurozone finance ministers.

The agreement means the plan will now be put to the parliaments in each of the EU member states for approval.

The crucial vote is expected to take place in Berlin on 27 February. Germany is the biggest EU contributor to the Greek financial bailout and the programme has become deeply divisive among the German public.

The Eurogroup is set to ask Athens to make some changes to its reform programme, although specific details are yet to be released.

"We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close coordination with the institutions in order to allow for a speedy and successful conclusion of the review," the Eurogroup said in a statement.

If eurozone parliaments approve the bailout package, Greece will gain access to short-term financial relief. The extension will last for four months from February 28, meaning that Athens could find itself in a similar predicament in late June.

IMF warning

In a letter to the head of the Eurogroup, Christine Lagarde criticised the lack of detail in the Greek proposals and said that as things stand, the IMF would not be able to guarantee a successful extension of the financial assistance programme when it expires in 2016.

"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," Lagarde wrote.

The policy proposals are not enough to ensure an IMF extension is granted next year, she wrote, adding that the lack of detail was understandable from a novice government.