Athens won’t get EU rescue loans after breaking reform promise

© Yannis Behrakis
The European Union will not release a new bailout tranche to Greece in September, according to EU diplomats cited by the German daily Handelsblatt Global.

Athens has reportedly managed to implement only two out of 15 reforms previously agreed with its international creditors. Moreover, the country has slowed down the privatization process of its public assets.

Under the terms of the bailout deal signed in 2015, the international lenders including the International Monetary Fund, the European Central Bank and the eurozone were to provide €86 billion in aid by 2018 in return for ultra-unpopular austerity measures in the country.

The reforms include tax hikes, pension cuts, as well as the privatization of public assets. Greece was obliged to bring in a primary budget surplus to 3.5 percent of GDP by 2018.

Earlier this year, the Greek government led by Alexis Tsipras approved the requested measures despite huge waves of public protests across the country. The reforms were centered around taxes on alcohol, tobacco, fuel, internet usage, cars, hotel stays, as well as an increase in the basic value-added tax rate from 23 to 24 percent.

The voted measures also aimed to start a privatization fund to ease the sale of public companies, as well as to free up the sale of non-performing loans by national lenders.

Following the step, eurozone authorities approved a tranche of €10.3 billion from the overall package with an initial €7.5 billion transferred to Athens in June, with the remaining of €2.8 billion scheduled to arrive this month.

The Eurogroup plans to discuss a progress report on Greece at a meeting in Bratislava at the end of the week, the German daily reports.