European Commission Backs Greek Reform Proposals – Wall Street Journal

Updated Feb. 24, 2015 9:41 a.m. ET

BRUSSELS—Eurozone finance ministers have approved a four-month extension to Greece's bailout, two European officials said Tuesday.

The ministers discussed a list of reform measures proposed by the Greek government in a conference call Tuesday afternoon. The deal still needs to be voted on by parliaments in a handful of eurozone countries—including Germany and Finland—but approval there is expected.

The approval means that Greece's €240 billion ($ 273 billion) bailout from the eurozone and the International Monetary Fund won't expire at the end of February and will instead run until the end of June.

The European Commission had earlier Tuesday backed a list of proposals sent by Greece to its creditors on Monday night, with a spokesman saying the list was "sufficiently comprehensive."

"We are notably encouraged by the strong commitment to combat tax evasion and corruption," commission spokesman Margaritis Schinas said.

Greek stocks earlier surged on the news that the commission believed the proposals appeared to meet the demands of eurozone finance ministers, with the main stock exchange in Athens rising more than 8% in early afternoon trading. Bonds also jumped.

The list, reviewed by The Wall Street Journal, includes pledges on privatizations, reforms to pension policy and government spending cuts, including reducing the number of ministries from 16 to 10. It also pledges to raise the minimum wage, a measure that has raised concerns among some of Greece's creditors.

Notably, the proposals include measures to "unify and streamline" Greece's pension policy, the official said—despite resistance from the government in Athens until now to make further changes to its pension system. The government also pledged to fight early retirement, the official said, but also laid out plans to create a "basic income scheme" for early retirees, which would cushion some of the hardship brought on by the changes.

But a eurozone official noted that the letter only commits not to reverse existing sales of government assets to the private sector. Greece's creditors have been pushing Athens to sell these assets, though targets for doing so have repeatedly slipped. The new Greek government has argued that selling assets in the current depressed economic environment would lead to sales at prices below their true value.

Write to Gabriele Steinhauser at gabriele.steinhauser@wsj.com and Matthew Dalton at Matthew.Dalton@wsj.com