By Rebecca Christie and Nikos Chrysoloras, Bloomberg
Greek government officials will meet in Paris tomorrow with representatives of the so-called troika of international creditors in a bid to break a deadlock over freeing up the last tranche of the country’s bailout.
Bonds gained today after the Greek Finance Ministry said in a statement that Greece and its creditors will discuss how to move forward with the current review and the framework for a post-bailout agreement. Two troika officials, who asked not to be identified because the talks are private, said one option might be extending the euro area-backed program beyond this year, a proposal that Greece has so far refused.
The European Commission said it’s premature to talk about next steps until the current review is resolved. The Paris meeting will focus on the current review and no discussion on extending the program is scheduled, according to spokeswoman Mina Andreeva.
“Both parties continue to work closely together with the aim of concluding the review and discussing how subsequently Greece can continue to strengthen its fiscal position and economic growth,” Andreeva said in an e-mail.
Without action, Greece’s rescue program backed by 145 billion euros ($180 billion) of cheap loans from the euro-area crisis fund is set to expire at the end of this year. A parallel program backed by International Monetary Fund loans is scheduled to continue through 2016, though Greece’s Prime Minister, Antonis Samaras, has said his country plans to forgo remaining tranches as of next year.
Yields Decline
Greek government bonds gained, with yields on the country’s 10-year benchmark slipping 3 basis points to 7.9 percent at 1:30 p.m. in Athens.
Bailout disbursements were attached to strict conditions of belt-tightening which triggered a political backlash. Greece is instead negotiating a credit line as it seeks to replace regular disbursements of bailout loans with bond sales, Samaras has said. Before getting there, Europe’s most indebted state needs to complete the last review of the current bailout.
Representatives of the troika of the European Commission, the European Central Bank and the IMF will meet tomorrow and Wednesday with Greek officials led by Finance Minister Gikas Hardouvelis “to discuss key issues to take forward the review,” Andreeva said. There’s no date set for European Economic Commissioner Pierre Moscovici’s planned visit to Athens, nor when the troika can return to Greece, she said.
A Greek Finance Ministry official said the subject of this week’s talks will be the current review and negotiating the post-bailout agreement, and that the negotiations would not include extending the current program.
December Meeting
Euro-area finance ministers are due to seek a way forward for Greece when they meet Dec. 8 in Brussels. Ministers have said they can’t take decisions until the current review, which began with talks in early September, also in Paris, is complete.
Greece last week submitted its 2015 budget to parliament without prior signoff from its international creditors, who argue that the Mediterranean country needs to secure additional savings of as much as 2.5 billion euros to reach its commitment for a primary budget surplus of 3 percent of gross domestic product.
Even though Greece has enough cash to last until next summer, failure to seal an agreement by the end of this year could leave Greek banks unable to use Greek sovereign bonds and government guaranteed bank bonds as collateral to draw liquidity from the ECB.
