Accessibility links

Greek Agreement with Creditors 'Getting Closer'

  • Associated Press

FILE - Dutch Finance Minister and chairman of the eurogroup Jeroen Dijsselbloem, left, shakes hands with Greek Finance Minister Euclid Tsakalotos during a meeting of eurozone finance ministers at the EU Council building in Brussels, Aug. 14, 2015.

FILE - Dutch Finance Minister and chairman of the eurogroup Jeroen Dijsselbloem, left, shakes hands with Greek Finance Minister Euclid Tsakalotos during a meeting of eurozone finance ministers at the EU Council building in Brussels, Aug. 14, 2015.

Greece's creditors said Friday they are within touching distance of an agreement over the next batch of reforms the cash-strapped country has to make to unlock further bailout funds and trigger debt-relief discussions.

Following weeks of criticism and delay, Jeroen Dijsselbloem, the top official of the grouping of the 19 euro countries, said a decisive breakthrough could come as soon as next Thursday, when a special meeting of the eurogroup will likely be held in Brussels. At that stage, the ministers and financial leaders could even start discussing how to ease Greece's long-term debt problems.

Dijsselbloem said both sides "are close to an agreement on number of key areas, such as the pension reform, the income tax reform'' and privatizations that Athens has to enact. He added that if Greece comes through on its commitments by that time "we stand ready to consider more measures to assure debt sustainability.''

All those reforms were part of last summer's bailout between the eurozone and the left-led Greek government. Greece narrowly avoided leaving the eurozone after Prime Minister Alexis Tsipras agreed to further austerity measures in return for the country's third bailout that was potentially worth 86 billion euros ($97 billion).

A successful review of the reforms demanded in the country's latest bailout program is needed to release more rescue loans for Athens to pay its debts and to kick-start discussions on how to reduce Greece's debt burden. The next big repayment is due to the European Central Bank in July.

Greek Finance Minister Euclid Tsakalotos said it was essential for Greece to have debt relief talks if a deal is found on the reform measures which will further cut into the wealth of Greeks.

"Whatever solution we arrive at will be discussed together with the debt,'' Tsakalotos said. "It is absolutely crucial for us that the whole package on debt and reform gives a clear signal to Greek citizens.''

Tsipras' government delivered many of the immediate demands from the bailout but it has struggled over many months to convince creditors that its pension reform proposals go far enough or that its overall budget plans follow the path outlined last summer in the bailout agreement.

At Friday's informal eurozone meeting, the sullen mood of the past months suddenly turned more optimistic. "We are very close,'' said Dijsselbloem.

EU Commissioner Pierre Moscovici said that during negotiations in Athens this week "there really, really was good progress.''

On top of that, the EU statistics agency on Thursday produced some better than expected figures on Greece's public finances, specifically on the level of the country's budget surplus after debt repayments are stripped out.

Despite that underlying improvement which has come in the wake of years of austerity, the country's overall debt is still considered too high, especially by the IMF. At the end of 2015, it stood at 176.9 percent of Greece's annual gross domestic product, far more than any other eurozone country.

Since being locked out of international bond markets because investors were reluctant to lend Greece, the country has relied on bailout loans from eurozone partners and the IMF to avoid bankruptcy.

Even though eurozone finance ministers will be looking at Greece's debt sustainability, Dijsselbloem made it clear that "there is no support in the eurogroup on nominal haircuts,'' referring to outright reduction in Greece's debt. Instead they could look at extending the period of repayment and other reprofiling measures.

Worries over Greece have re-emerged in recent weeks partly because the left-led Greek government has a small parliamentary majority, which makes it more difficult to deliver the reforms required by creditors. The government is also facing growing public opposition to its pension reform plans.

The country also faces a daunting challenge to cope with migrants on its soil, many of whom have escaped war-torn Syria in an attempt to get to central Europe. Because the borders have been closed down by Greece's neighbors, many remain stranded in Greece — at last count, around 54,000.

XS
SM
MD
LG