Greek Prime Minister Alexis Tsipras won four more months to sellhis policy program to creditors while keeping his party at home onboard, as euro-area finance chiefs deferred a showdown over thenation's future in the currency bloc.

Greek stocks and bonds surged on Tuesday as finance ministersapproved a bailout extension after the government pledged to revamptax collection, consolidate pension funds and maintain sales ofstate-owned assets. The accord paves the way for the EuropeanCentral Bank (ECB) to continue support of Greek banks, while buyingtime for the euro area's most indebted state to convince creditorinstitutions it will deliver.

“Ceasefire, but no peace agreement,” Carsten Brzeski, chiefeconomist at ING Diba in Frankfurt, said of the deal in an email.“The general question of how to solve the unsustainability of Greekdebt has been postponed, not solved.”

As part of Tuesday's decision, the European Commission, the ECB,and the International Monetary Fund all signaled their support forGreece's commitments. IMF Managing Director Christine Lagarde andECB President Mario Draghi both warned that the Greek measuresstill need to be scrutinized.

The agreement opens a fresh chapter in the saga of Greece andthe euro area, which together—and sometimes at odds—have beenbattling since 2010 over preserving the currency union and keepingGreece afloat.

After two bailouts pledging 240 billion euros (US$272 billion)and the biggest debt restructuring in history, Greece remains shortof cash and cut off from financial markets, with the threat ofwider contagion ever present.

The deal gives Greece until April to refine the details and showthe finance ministers how they follow through. Greece can't tapmore bailout funds, including the next tranche of about 7 billioneuros, unless it passes the authorities' review.

“This list is sufficiently comprehensive to be a valid startingpoint,” European Commission Vice President Valdis Dombrovskis andEconomic Commissioner Pierre Moscovici said in a letter to DutchFinance Minister Jeroen Dijsselbloem, who chairs meetings of hiseuro-area counterparts. “Determined and swift implementation ofreform commitments will be key for a successful conclusion of thereview.”

'Not Specific'

Lagarde said in her own letter to Dijsselbloem that the policiesare “generally not specific” and don't give “clear assurances” thegovernment intended to undertake key reforms. Draghi wrote that theECB needs to assess whether legislation will be replaced by“measures of equal or better quality.”

Greek stocks rallied, with the benchmark Athens Stock Exchangerising 9.3 percent. Greek bonds also rose, as yields on three-yearbonds fell 254 basis points to 12.52 percent. The euro was down 0.1percent at $1.1325 at 5 p.m. Athens time.

Attention now turns to those national parliaments that must givetheir assent to any change to the terms of euro-region bailouts.German lawmakers will vote on Feb. 27, Michael Grosse-Broemer, theparliamentary whip for Chancellor Angela Merkel's bloc, toldreporters in Berlin on Tuesday. The Finnish government said in astatement on its website that the Greek list was comprehensiveenough to grant the extension.

This next stage will be yet another key moment for Greece. Asizeable debt repayment is due in June, which has become the nextdeadline for securing follow-on financing. Tsipras's government hassaid it will work with the EU institutions on what kind of supportarrangement comes next.

“If the past three weeks were seen as difficult, the next threeto four months are going to be a major challenge, a major learningprocess for all parties,” Jens Bastian, an independent financialanalyst at Macropolis.gr and former member of the EuropeanCommission's Greek task force, said in a Bloomberg TVinterview.

Tsipras faces a tough battle within the ranks of his Syrizaparty. Satisfying this constituency while working with euro-areacounterparts like German Finance Minister Wolfgang Schaeuble willbe a formidable task, Bastian said. Communicating this to adomestic audience is “where the heart of the problem will rest inthe coming weeks,” he said.

While today's decision won't lead to immediate new aid payments,it may give some breathing room for Greece's financial system,reeling from the departure of more than 20 billion euros indeposits since snap elections catapulted Syriza to power lastmonth.

As uncertainty mounted over whether the bailout would expire atthe end of February as scheduled, the ECB on Feb. 4 lifted itswaiver that had allowed junk-rated Greek collateral to be acceptedunder the central bank's rules.

The ECB is likely to wait until at least its March 5monetary-policy meeting before it restores its waiver on collateralquality for Greek banks. The Frankfurt-based central bank hassignaled it needs to be confident the extended program will succeedbefore making the change.

–With assistance from Fred Pals in Amsterdam, Nikos Chrysolorasand Paul Tugwell in Athens, Karl Stagno Navarra and JonathanStearns in Brussels, Radoslav Tomek in Bratislava, Slovakia, BirgitJennen, Rainer Buergin and Brian Parkin in Berlin, Kasper Viita inHelsinki, and Jeff Black in Frankfurt.

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