Greece given 10 days to act on reforms

9 Oct 2012, 10:39 am   -   Source: AAP

Greece must deliver on 89 planned reforms by the EU summit on October 18 if it wants long-delayed loans, creditors say.

Greece must deliver on scores of broken promises by next week's EU summit if it wants long-delayed loans, its creditors said as they eased the release of money for Portugal and launched a new "bazooka".

"Acting means acting," International Monetary Fund Managing Director Christine Lagarde said after talks with eurozone finance ministers due to broaden out to include European Union partners on Tuesday.

As German Chancellor Angela Merkel readied to brave Athens later the same day - sealed off with thousands of police on high alert - the ministerial focus switched away from Spain again despite the IMF announcing an inspection trip to monitor "financial sector reforms."

Months of uncertainty about a bailout request from Madrid had looked until recently like dominating the summit of EU leaders in Brussels on October 18-19, but as so often over the past two-and-a-half years, the bloc is likely to try to make a breakthrough on Greece.

Jean-Claude Juncker, the Luxembourg prime minister who chairs the Eurogroup, said a desperately-needed next loans payout, worth 31.5 billion euros ($A40.43 billion), could only go through if Athens "demonstrates" it can "implement" 89 planned reforms such as privatisations "by 18 October at the latest".

The scores of "prior actions" involve major privatisations and a whole set of reforms to labour markets or bureaucratic red-tape.

Juncker said that after being debriefed by the troika of international lenders - the European Commission, IMF and European Central Bank - "we were pleased to hear substantial progress has been made on Greece, specially in the last days."

But talks between Greece and the troika must be finalised, he stressed.

Payment of the tranche has been blocked since June.

Greek Prime Minister Antonis Samaras said on Friday that if the next aid instalment did not arrive soon, state coffers would be empty by November.

The Eurogroup showed they were ready to reward Portugal for reforms after Lisbon unveiled new tax hikes as part of its 2013 budget.

Ministers approved a 4.3 billion euros ($A5.52 billion) tranche of EU-IMF loans, hours after hailing the entry into service of the European Stability Mechanism.

This 500 billion euro ($A641.68 billion) war chest, delayed by a challenge in Germany's Constitutional Court, was given AAA ratings by credit giants Fitch and Moody's, although the latter took the shine off the party by giving it a "negative" outlook.

Juncker said the fund's entry into service marked a "historic milestone in shaping the future of monetary union.

By the end of the month it will contain 200 billion euros ($A256.67 billion), with resources left in a temporary fund, the European Financial Stability Facility (EFSF), taking combined lending capacity to 700 billion euros ($A898.36 billion).

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