EU calls on France, Greece to stick to reforms

Eurozone officials urged France's incoming government on Tuesday tostick to reform pledges, and Greece to capitalise on its austerity sacrifices in returnfor a long-delayed 6.3-billion-euro slice of bailout cash.The loan disbursal announced at a two-day meeting of European finance ministers,after seven months of tough talks between Greece and its EU-IMF creditors, willenable Athens to repay maturing debt in May.And Greek finance minister Yannis Stournaras later said a planned return tofinancial markets would happen earlier than originally announced.As Greece closed one more difficult chapter in its slow recovery, France seemedheaded for a fiscal discipline dispute with the EU.There were long faces after French President Francois Hollande said implicitly that Paris would seek leniency from the EU Commission for overshooting its publicdeficit target, as he announced a change of government on Monday."It is essential that France act decisively, both to ensure the sustainability of its public finances, and to address well known bottlenecks to competitiveness andgrowth," reacted EU Economic Affairs Commissioner Olli Rehn."For the sake of refreshing our memories, the existing deadline on France's deficit has already been extended twice," Rehn said.Hollande wants EU authorities to take account of structural reforms in the making inFrance when analysing the deficit, which under the bloc's Stability Pact should comein at 3.0 percent of output."I will fully agree with the president of France, it is in the interest of Europe to havea strong France," said Eurogroup chief Jeroen Dijsselbloem.But "France has to deliver on its commitments under the growth and stability pact."The French public deficit, or gap between spending and revenues, amounted to 4.3percent of national output last year, official data showed on Monday.This is above the target of 4.1 percent agreed with the EU, and raises the stakes asHollande oversees the composition of a new government after a local electiondebacle on Sunday. France has said it intends to tighten the budget by 50 billion euros ($69.0 billion)over three years, both to meet its EU deficit targets by the end of next year and cutcharges on businesses which have eroded the country's industrial competitiveness.The Eurogroup had a similar message for Italy, where new Prime Minister MatteoRenzi has announced a 10-billion-euro tax cut for low-income families, a move thatcould put pressure on budget forecasts. "We trust that Italy will respect its European commitments and focus on fosteringsustainable growth and job creation," Rehn said.- Funding for Greece -Athens will receive 6.3 billion euros ($8.7 billion) from its pending EU bailout fundat the end of April, Dijsselbloem said.Two more slices of 1.0 billion euros apiece will be disbursed in June and July ifGreece makes progress on pledged reforms.This leaves 1.8 billion euros remaining in Greece's bailout programme as far as theeurozone is concerned, said Klaus Regling, managing director of the European Stability Mechanism."The most important thing is to now implement all the structural reforms that havebeen agreed," said European Central Bank President Mario Draghi."The thing to do is to not unravel the fiscaladjustment, the progress that has beenachieved with so much pain and effort," he said.- Nod to IMF -Dijsselbloem said that following these decisions, Greece was "fully financed" for thenext 12 months.This is a requirement set by the IMF, which makes its own loan payments conditionalon Greece's one-year funding viability.The global lender will meet later this month to determine how much of its ownpending payments -- about 3.6 billion euros -- to release to Greece.Athens has so far received a combined 240-billion euro bailout.Dijsselbloem refused to comment on whether Greece might yet need another loan.Greece had said previously it intends to return to borrowing on financial markets inthe second half of the year with a sale of five-year bonds to raise 1.5-2.0 billioneuros.Stournaras on Tuesday said "a small issuance of bonds, 3-5 year bonds" would takeplace in the first half of the year.Greek unions have called for street protests in the capital in the evening againstausterity.