* Athens to get staggered payments over course of 2013
* Euro zone states to pay 2.5 bln euros in July, rest later
* EU's Rehn says time to step up pace of reform in Greece
* Dijsselbloem says stability in Portugal crucial
By Annika Breidthardt and Martin Santa
BRUSSELS, July 8 Greece secured a lifeline from
the euro zone and the IMF on Monday but was told it must keep
its promises on cutting public sector jobs and selling state
assets to get all the cash.
The 6.8 billion euro ($8.7 billion) deal, which spares
Greece defaulting on debt in August, will see Athens drip fed
support under close watch from the euro zone and the
International Monetary Fund to ensure implementation of
The tough approach underlines waning patience with Greece,
which has been kept afloat on emergency funding since May 2010
but has failed to make all the difficult reforms demanded of it
after a decade of living beyond its means.
"It's time to step up the momentum of reform in Greece,"
Olli Rehn, the European commissioner in charge of economic
affairs, told a news conference.
Reforming Greece remains central to the euro zone's ability
to put its crisis behind it, while the bloc needs Athens to
cooperate to keep the IMF from pulling out of the programme.
But it is only one of the problems facing the euro zone.
Political upheaval in Portugal last week raised questions
over Lisbon's ability to complete reforms needed to return to
borrowing on the markets. Rehn also cautioned
that the "clock was ticking" on Slovenia, where banks are
saddled with billions of euros of bad loans.
Keeping Greece in a hand-to-mouth existence, meanwhile,
could threaten its bid to emerge from economic depression, with
nearly two out of three young Greeks without work.
Thousands of municipal workers and school teachers took to
the streets of Athens earlier on Monday in a noisy protest
against public sector cuts.
DRIP BY DRIP
Greece is expected to return to growth in 2014, albeit an
anaemic 0.6 percent. Athens was counting on the money, one of
the last big disbursements under its 240 billion euro bailout,
to be paid out in one go.
But it will now have to wait for much of the cash injection.
Even the first payment of 2.5 billion euros requires that
Athens show creditors by July 19 that it is serious about
cutting thousands of public sector jobs by the end of the year,
as well as modernising the tax code.
Rehn denied that trickling out the funds would derail the
recovery, but the economic situation is fragile.
Greece failed in June to attract any buyer for natural gas
company DEPA as its plans to sell state assets fell well short
of what its backers had demanded. Exports, investment and
tourism have yet to show signs of a recovery.
Under the terms of the Monday's agreement, euro zone finance
ministers and IMF head Christine Lagarde agreed to make
staggered payments of aid to Greece starting with the 2.5
billion euro instalment that comes from euro zone countries.
The agreement foresees a further payment from euro zone
countries of 500 million euros in October.
Central banks in the Eurosystem will contribute 1.5 billion
euros in July and 500 million euros in October, by dishing out
the profits that they and the European Central Bank made from
the sale of Greek debt that they had held.
The IMF will give 1.8 billion euros in August.
Keeping the Washington-based lender on side will be one of
the most delicate balancing acts facing the euro zone this year,
as the IMF grows increasingly uncomfortable with the problems in
"If the IMF is not needed by the euro area ... it's the best
news of the day," Lagarde told reporters after the meeting.
As well as Greece, officials are concerned that more
upheaval could upset Lisbon's efforts to leave a 78 billion euro
bailout programme, as bond yields topped 8 percent last week, a
level seen as making new borrowing unaffordable.
Portuguese Prime Minister Pedro Passos Coelho patched over a
political crisis at the weekend, caused by concerns about the
government's austerity drive, by giving his junior coalition
partner more say on economic policy.
"It is crucial ... that there is political stability to push
forward programmes and this goes for Portugal," said Jeroen
Dijsselbloem, the Dutch Finance Minister who chaired the meeting
of euro zone ministers.
"We hope that political stability will continue."