Greece bailout:

Four-month extension in eurozone deal

21 Feb BBC

Greece and eurozone nations have agreed a deal to extend financial aid after bailout talks in Brussels.

Eurozone finance ministers reached an agreement to extend Greece's financial rescue by four months.

Dutch finance minister Jeroen Dijsselbloem, head of the Eurogroup, said that Athens had pledged to honour all its debts.”This is a very positive outcome,” he told a news conference on Friday night.”I think tonight was a first step in this process of rebuilding trust. As you know trust leaves quicker than it comes.

Tonight was a very important, I think, step in that process,” Mr Dijsselbloem said.In return for the extension, Greece has agreed to present an initial list of reform measures by Monday, he added.Yanis Varoufakis, the Greek finance minister, said he would work night and day between now and Monday to devise the new list.

Eurozone officials will then review the reforms and see if they go far enough to appease creditors.If finance chiefs are left unsatisfied, there is still a chance the deal will be scrapped.Mr Varoufakis added that Greece had not used threats or bluff during the talks: “The four-month period will be a time to rebuild new relations with Europe and the IMF.” However, he said the deal would be “dead” if the list of Greek reforms was not agreed, .Friday's extension was sealed just days before Greece's bailout programme ends.

The BBC's chief business correspondent Linda Yueh says the Greeks have now won some flexibility but asks, did the Greek government wrestle back enough control with the agreement to satisfy the Greek people? Greece and Germany have stepped back from the brink.

And for now Greece remains in the eurozone.But there will be months of fraught negotiations before it will be clear whether the economy and finances of this recession-battered nation have been put back on a stable footing.In fact, what was agreed on Friday night guarantees there will be no fresh crisis no fears of Greece quitting the eurozone for a full two days.

Because by Monday night, the Syriza government has to submit a preliminary list of proposed economic reforms which will form the basis of negotiations till the end of April on a new financial settlement for the country.

A Greek government official said Athens now had time to negotiate a “new deal”.”Greece has turned a page,” the official said. “We have avoided recessionary measures.” Greece had been seeking a six-month extension of the bailout but the Eurogroup opted for four months.The agreement removes the immediate risk of Greece running out of money next month.Christine Lagarde, head of the International Monetary Fund, said: “We are pleased that work can actually begin.”

She was involved in Friday afternoon talks between Mr Varoufakis and Wolfgang Schaeuble, the German finance minister, that helped pave the way for the deal. The agreement helped send Wall Street to new record highs, with the Dow Jones Industrial Average ending up 154 points, or 0.9%, at 18,140.44 points, while the broader S&P 500 added 0.6% to 2,110.3 points.

The euro gained against the US dollar on Friday following the announcement, adding 0.3% to $1.1403.Sebastien Galy, a foreign exchange analyst at Societe Generale, said: “It certainly looks like we're moving away from disaster. It should help a stress that has been building up in the market to be released.”