Nikos Chrysoloras & Rebecca Christie, Bloomberg
There has been little convergence in talks between Greece and its creditors as time runs out to secure a deal before the country needs to make payments to the International Monetary Fund in early June.
Talks to release bailout funds the country needs to pay the IMF almost 1.6 billion euros ($1.75 billion) next month have made little progress in recent days, people familiar with the matter said. The first of the transfers is due June 5.
Greek officials plan to hold a conference call later Tuesday in Brussels with the European Commission and IMF — postponing until tomorrow an in-person meeting originally planned for Tuesday, said the people, who asked not to be identified discussing private negotiations.
German Chancellor Angela Merkel and French President Francois Hollande last week set a target of reaching a deal by the end of May, a goal that Tsipras’s spokesman Gabriel Sakellaridis said Monday can still be reached. Key sticking points remain in areas such as budget targets, sales-tax rates, pension and labor market rules, Sakellaridis said.
“Unfortunately, a lot of time has been lost,” European Central Bank Governing Council member Ardo Hansson said in Tallinn, Estonia. “An agreement where underlying principles aren’t undermined would be in everyone’s interest, but so far it has been progressing very arduously.”
After falling the most in almost three weeks on Monday, Greek shares rebounded Tuesday, with the benchmark Athens Stock Exchange gaining 1.1 percent at the close of trading. The gauge has fallen about 31 percent in the past 12 months, making it one of the worst performing major equity indexes tracked by Bloomberg.
G-7 Meeting
Greece’s standoff with lenders is likely to be a major topic on the sidelines of a Group of Seven gathering starting Wednesday in Dresden, Germany, for finance ministers and central bank governors. Greece has seen liquidity evaporate, pushing the economy back into recession. Record deposit withdrawals and the state’s increasing difficulty in meeting debt payments have renewed doubts about the country’s ability to stay in the euro.
U.S. Treasury Secretary Jacob J. Lew will urge his G-7 counterparts to find a constructive and pragmatic outcome in the Greece negotiations, a Treasury official said Tuesday. Failure to reach an agreement could create some unpredictable uncertainties for the European and global economies, said the official, who briefed reporters by phone on condition of not being further identified. A bad outcome in Greece could impact Europe and the rest of the world through many channels, he said.
ECB Call
The ECB is scheduled to hold a weekly conference call Wednesday to review the liquidity situation of Greek banks, as well as the discount it applies to the collateral the lenders pledge in exchange for emergency cash. The banks have lost access to capital markets, forcing them to rely on 80 billion euros of emergency assistance to stay afloat. The ECB can restrict those funds, if it judges that beneficiary lenders are not solvent or don’t have enough eligible collateral.
Even though no aid disbursements have been made to Greece since last summer, the country has managed to meet external payments by slowing down spending, building up arrears to suppliers and vendors, encouraging citizens to pay overdue taxes, and seizing the cash reserves of regional governments, hospitals, universities, and other public entities.
Greece expects to finalize a deal with creditors by June 5 — when the first IMF payment is due — and is discussing with them imposing a levy on bank transactions, Finance Minister Yanis Varoufakis told reporters in Athens on Tuesday. In a sign of the country’s efforts to find ways to boost income, Varoufakis said the government is also preparing legislation proposing a 15 percent tax to legalize undeclared deposits held in Switzerland and other jurisdictions.
