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Finance minister George Papaconstantinou has been commended for his work in reforming Greece's public finances. Petros Giannakouris/AP

Greece turns a corner – and can borrow more money

The EU and IMF praise “impressive” progress in rescuing the country’s finances.

GREECE WILL BE ALLOWED to borrow more money from the European Union and the International Monetary Fund after the two bodies praised the country for its “impressive” progress in reforming the budget.

In a joint statement after a visit to Athens, the EU and IMF commended the “great progress” of the Greek government, led by finance minister George Papaconstantinou, in implementing austerity measures to cut its budget gap.

Our overall assessment is that the programme has made a strong start. The end-June quantitative performance criteria have all been met, led by a vigorous implementation of the fiscal programme, and important reforms are ahead of schedule.

The review found that the government was implementing the measures “as agreed” under its efforts to cut the budget deficit from 8.6% of its GDP in 2009 to just 2.4% this year, and to return to a 6.0% surplus in 2015.

As a result, Greece is tipped to be offered further bailout loans from the two bodies, with the next €9bn instalment of a three-year package worth €110bn being readied.

“I’m confident we are definitely going forward with the next payment,” said Poul Thomsen, the head of the IMF’s visiting team.

The news will be a welcome boost to the country which currently cannot access international capital markets, aside from short-term treasury bills which typically require a country to constantly refinance its debt.

Greece’s stock market has risen by 23% in the last month, as investors become more confident in the government’s ability to stick to the terms of the EU-sponsored reform programme.

Spain, meanwhile, sold €3.5bn of three-year bonds this morning at an interest rate of 2.2%, down from the 3.3% paid just two months ago.

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