Tags: greece | eurozone | aid talks | debt deal

Greece Aid Talks Gain Urgency as Breakthrough Remains Elusive

Sunday, 03 May 2015 11:03 AM

Talks between Greece and its international creditors gained in urgency as the two sides remained apart on key elements of the country’s bailout agenda after four days of intensive negotiations.

While progress has been made and the atmosphere improved, differences were still significant on issues from fiscal assumptions to asset sales and labor and pension reforms, three people familiar with the negotiations said on Sunday.

As talks stretched into this week, euro-area officials were skeptical that a technical agreement will be reached by May 6, when the European Central Bank meets to discuss emergency funding for Greek banks, two of the people said, asking not to be named because the talks are private.

The financial noose is tightening on Greece, which is due to pay about 200 million euros to the International Monetary Fund on May 6 and another 770 million euros on May 12. Greek Prime Minister Alexis Tsipras has said he aims for enough progress in technical talks in Brussels and Athens to allow the ECB to relax liquidity conditions and avert a default as early as this month, Greek newspaper Kathimerini reported on Sunday.

“It’s clear that we need an interim agreement as soon as possible to unclog the situation,” Greek government spokesman Gabriel Sakellaridis said on Saturday. “The continuation of this uncertainty benefits neither Greece nor Europe.”

The ECB’s governing council may discuss on May 6 whether to increase discounts on the collateral it accepts from Greek banks in return for emergency funding, a move that could further restrict access to liquidity.

The stance of the governing council will depend on the progress achieved in the talks in the meantime, one of the people said, adding that restrictions on Greek banks can only be eased once it’s absolutely clear that bailout funding will resume.

Improved Atmosphere

Tsipras told his cabinet on Thursday he’s confident of closing a deal ahead of a meeting of euro-area finance ministers on May 11, even as his government sent conflicting signals on its willingness to agree on reforms required under the 240 billion-euro ($268 billion) bailout.

Investor optimism that a deal to unlock financial aid for Greece is close after months of talks put the country’s assets among the region’s best performers in April. The Athens Stock Exchange Index of shares jumped the most by the end of April since September 2012 from a two-year low on April 21. It ended up 6.1 percent in April, the biggest rally in western Europe. Bonds returned 13 percent, as securities across the region fell.

Even as officials cited improved atmosphere in the talks and increased engagement after Tsipras assigned a new negotiating team, pushing aside Finance Minister Yanis Varoufakis, opposition within his government on long-stalled reforms remains strong. Officials earlier had expressed hopes that a preliminary agreement could have been reached by Sunday.

Working Hard

While the government is working hard to get a deal as soon as possible, it will draw the line on matters such as labor market reforms and cuts to wages and pensions, Sakellaridis said.

Despite progress on the process, there is still a long way to go on the substance of the reforms needed to reach an agreement, another person familiar with the talks said earlier.

The official said that the Greek government’s economic assumptions are optimistic, making it difficult to agree on the extent of fiscal adjustment measures the country must adopt to meet goals under its bailout.

Those assumptions for deficit, debt and revenue are based on a growth forecast of 1.4 percent for 2015. The Commission is expected to lower its current forecast of 2.5 percent to well below the government’s estimate when it issues its spring forecasts on May 5, the official said.

Easing Stance

In a sign that Athens may be ready to ease its stance against certain reforms, it plans to invite investors to buy a stake in the country’s main port of Piraeus on May 6. Greece will proceed this year with the sale or leasing of stakes in several strategic assets, including Piraeus Port Authority SA and 14 regional airports, according to Greek officials with direct knowledge of the matter.

The government is also prepared to streamline at least three different value added tax rates into one, and limit exemptions, Frankfurter Allgemeine Sonntagszeitung reported on Saturday, citing people close to negotiations.

Dutch Finance Minister and Eurogroup President Jeroen Dijsselbloem said it was too early to say whether talks with Greece had reached a turning point.

“They’re working hard now and that’s what we’ve gained,” Dijsselbloem told reporters in the Hague on Friday. “But in the end we only look at the results and we’re not that far yet.”

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Talks between Greece and its international creditors gained in urgency as the two sides remained apart on key elements of the country's bailout agenda after four days of intensive negotiations.
greece, eurozone, aid talks, debt deal
Sunday, 03 May 2015 11:03 AM
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