Greece must meet bailout goals amid refugee crisis, Dombrovskis says

Greek authorities need to pass the measures required by their bailout program to unlock new aid, regardless of how Europe’s refugee crisis continues to unfold, European Commission Vice President Valdis Dombrovskis said.

The financial rescue is on a separate track from European efforts to deal with the flood of refugees coming into Greece and needs to stay on course, Dombrovskis, whose portfolio includes the euro, said in an interview this week in Brussels. He urged Greece to take steps on pensions, personal income-tax measures and privatization to allow the completion of a review of the rescue and receive a new cash infusion.

“We recognize that the Greek government is facing serious challenges and providing assistance for dealing with the refugee crisis, but as regards program negotiations, once again the program conditionality is set,” Dombrovskis said. He said the commission hasn’t set a deadline for concluding the review. Creditor delegates are expected to return to Athens on April 2.

Delays in reaching a deal on the next batch of euro-area loan payments have added to pressure on Greece as its economy struggles and its emergency infrastructure buckles after more than 1 million refugees arrived in 15 months. Greece and its bailout monitors ended the latest round of talks on Sunday without an agreement, while citing progress on pension and income-tax measures.

Dombrovskis said Greek bank deposits are showing a “modest rebound” and non-performing loans are being addressed, meaning they aren’t the biggest hurdle facing the bailout plan that Prime Minister Alexis Tsipras and fellow euro-area leaders agreed on last year.

“There is a need to move swiftly with the first review, but of course we cannot move faster than the Greek government moves taking the necessary decisions,” Dombrovskis said. “It’s clear that the review would also serve as a reassuring signal about financial stability in Greece.”

German stance

German Finance Minister Wolfgang Schaeuble reiterated Wednesday that Greece’s reform efforts are separate from the refugee crisis. Germany will help Greece cope with the refugee crisis, yet that “doesn’t supersede the fact that Greece must carry out its reforms and continue on a path of sustainability,” he told reporters in Berlin.

Once Greece finishes its current bailout review, talks can move ahead on the role of the International Monetary Fund and on what kind of debt relief might be possible. Dombrovskis said it’s too soon to say how much money the IMF might contribute, though “we work under the assumption that IMF would also be part of this program.”

[Bloomberg]