ATHENS—Greece's international lenders of last resort said Friday the country has made enough progress to receive an additional €15 billion ($20.4 billion) aid tranche but needs to accelerate economic changes and commit large-scale privatizations.
"The program is broadly on track stabilizing the economy but serious challenges exist for the creation of fiscal sustainability," said Servaas Deroose, mission chief for the European Commission, the European Union's executive arm.
Representatives of the International Monetary Fund, European Commission and the European Central Bank were speaking at a joint press conference in Athens on their third mandatory progress review, which green-lighted the provision of the additional funds in due course. The EU will provide €10.9 billion and the IMF €4.1 billion.
The three international lenders—known locally as the troika—insisted that the country must commit to a massive €50 billion privatization program to be completed by 2015. The funds will be used to reduce Greece's mountains of national debt that top €330.1 billion. To date, the socialist government had only committed to €7 billion-worth of privatizations.
"This is a very ambitious program but we are at a critical juncture where we need to accelerate reforms. In some cases some things are not going as fast as expected due to technical complexity and social sensitivity," said Poul Thomsen, IMF mission chief.
Mr. Thomsen specifically referred to the need for an overhaul in state enterprises, tax policies, public administration, social and military spending.
But banks were also on the list for reforms. Klaus Masuch, the ECB mission chief, said the lenders were concerned about Greek banks' heavy reliance on the ECB for liquidity. "This can only be a temporary solution, and they need to return to market funding over the medium term."
The debt-strapped country agreed to implement unprecedented austerity measures and unpopular structural reforms that are reviewed every three months in exchange for the €110 billion bailout inked with the IMF, commission and EU in May 2010, to stave off certain insolvency.
The new funds are critical because January revenues flagged despite being in surplus. The country essentially has no other way to cover the €12.44 billion in fixed-interest-market debt maturing during March, and must be paid to avert default.
"Continued adjustment and large-scale support from the international community will mean Greece will return to the market, hopefully not later than early next year," Mr. Thomsen said.
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