August 18, 2019
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Greece bailout deal said to be a step closer as ministers meet

ALKIS KONSTANTINIDIS | REUTERS
ALKIS KONSTANTINIDIS | REUTERS
A cauldron set alight with the Olympic Flame is pictured atop the Acropolis hill as the Parthenon temple is seen in the background in Athens, Greece, April 26, 2016.

Finance ministers from the euro-area nations gathering in Malta on Friday are a step closer to breaking the latest deadlock over Greece’s bailout that would pave the way for about 7 billion euros ($7.5 billion) in aid for Athens.

Greece and its international creditors, who have been wrangling over key economic overhauls for months, have reached a deal that will allow bailout supervisors to return to Athens to conclude negotiations, a European Union official said, speaking on condition of anonymity. An International Monetary Fund spokesman declined to comment.

“I am in a positive mood,” Dutch Finance Minister Jeroen Dijsselbloem, who leads the euro-area meetings, told reporters as he arrived for the talks, adding that “the big political deal” to allow the payment of the latest bailout tranche is still some way off.

Talks between the government of Greek Prime Minister Alexis Tsipras, euro-area creditors and the IMF have been stalled for months as the parties haven’t been able to agree on how to amend Greece’s pensions, labor market and tax system. And while a compromise proposal gained traction earlier this week, finance ministers entered their talks without a full agreement.

No precise date for the return of the supervisors has been decided, but will probably be at the start of next week, a separate official involved in the discussions said. A Greek finance minister spokesman declined to comment on the report.

“We can and want to reach a solution for Greece in a short period of time,” German Finance Minister Wolfgang Schaeuble told reporters as he entered the meeting. “Uncertainty in Greece will grow if it takes longer and no one can want that and the IMF also can’t want that in the end.”

Talks stepped up earlier this week as Finance Minister Euclid Tsakalotos led a Greek delegation to Brussels to try to overcome the differences. In a proposed compromise discussed on Tuesday, Greece would reduce its pension outlays by 1 percent of gross domestic product in 2019 and lower its tax-free threshold in 2020 by a similar amount, according to three EU officials with knowledge of the talks.

The tax measures would be accelerated by a year if Greece is set to miss its primary surplus target, which excludes interest payments, in 2018, said the officials, who asked not to be identified since discussions are private.

Officials hope that agreement on the plan could break the current deadlock, clearing the way for auditors to return to Greece and allow for an aid disbursement before the country has to make more than 7 billion euros in bond payments in July.

Still, even when the creditors return to the Greek capital, other technical issues, including reforms to the energy sector, will also need to be agreed on before the review can be completed.

Concluding negotiations would clear the way for what are expected to be thorny discussions over easing the country’s debt load and for the next disbursement of bailout cash. While Greece doesn’t face any imminent liquidity trouble, it still has to meet the debt payments in July, while the uncertainty over its bailout weighs on the country’s economy.

The Greek economy and investors need an agreement that all the euro area can sign up to, European Economics Commissioner Pierre Moscovici told reporters as the meeting got under way. “We need to get out of this perpetual uncertainty.”

 



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