The Eurogroup has approved a list of reforms submitted by Greece as a condition for extending its bailout by four months, officials say.
Eurozone finance ministers said they had agreed to begin national procedures – parliamentary votes in several states to give the deal final approval.
The measures offered by Greece include combating tax evasion and reforming the public sector.
However, IMF chief Christine Lagarde said they lacked “clear assurances” in key areas.
Greece’s debt stands at more than €320 billion, and its current €240 billion bailout expires on February 28. Fresh funding will not be released until Greece’s proposals are approved in detail.
The stakes of talks over continued financial aid have been high because of fears of a Greek default that could push it out of the euro, triggering turmoil in the EU.
The main stock market in Athens rose by nearly 10% on February 24, hitting a three-month high.
The Eurogroup said in a statement: “We call on the Greek authorities to further develop and broaden the list of reform measures, based on the current arrangement, in close co-ordination with the institutions.”
The European Commission and the European Central Bank (ECB) both stated that the Greek proposals were a “valid starting point”.
The agreement had “averted an immediate crisis,” said European Commissioner for Economic Affairs Pierre Moscovici.
“It does not mean we approve those reforms, it means the approach is serious enough for further discussion,” he added.
However, Christine Lagarde expressed reservations about the reform proposals.
“In some areas like combating tax evasion and corruption I am encouraged by what appears to be a stronger resolve on the part of the new authorities in Athens,” Christine Lagarde wrote in a letter to the Eurogroup.
“In quite a few areas, however, including perhaps the most important ones, the letter is not conveying clear assurances that the government intends to undertake the reforms envisaged.”
The IMF, ECB and the Commission make up the “troika” of institutions that have managed financial rescue programs for Greece since 2010.
The four-month bailout extension was agreed on Friday after several rounds of talks, pending Greece’s delivery of its reform proposals.
The deal was widely seen as a climbdown by Greek PM Alexis Tsipras. The newly elected leader of the left-wing Syriza party is trying to balance satisfying the demands of creditors with meeting his pre-election pledges.
Alexis Tsipras’ government wants to clamp down on tax evasion, corruption and inefficiency in order to fund social spending and alleviate what it calls Greece’s “humanitarian crisis”.
ECB head Mario Draghi noted that Greek commitments “differ from existing program commitments in a number of areas”.
He said there would be a need to assess whether measures rejected by Greece were “replaced with measures of equal or better quality”.
Eurogroup chairman Jeroen Dijsselbloem said the Greek government had a right to put its own “stamp” on the bailout program.
“The new government is much more aggressive on taxes and corruption, and these are excellent things,” Jeroen Dijsselbloem told Dutch radio.
“But the Greek government is perhaps too optimistic about the speed with which they can boost tax revenues.”
Greek reform proposals:
- Combat tax evasion
- Tackle corruption
- Commit not to roll back already introduced privatizations, but review privatizations not yet implemented
- Introduce collective bargaining, stopping short of raising the minimum wage immediately
- Tackle Greece’s “humanitarian crisis” with housing guarantees and free medical care for the uninsured unemployed, with no overall public spending increase
- Reform public sector wages to avoid further wage cuts, without increasing overall wage bill
- Achieve pensions savings by consolidating funds and eliminating incentives for early retirement – not cutting payments
- Reduce the number of ministries from 16 to 10, cutting special advisers and fringe benefits for officials [youtube n6Vg2JqKhUw 650]