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Eurozone Sets Greece Reform Deadline Ahead of IMF Repayment

FILE - People walk past the Bank of Greece headquarters, in central Athens, March 27, 2015.

Eurozone partners set Greece a deadline of six working days to improve proposed economic reforms in time for finance ministers to consider some emergency funding to keep the country afloat after it makes a repayment to the IMF on Thursday.

EU officials said Athens made an urgent plea for cash at a meeting of deputy finance ministers in Brussels on Wednesday night but was told there must first be progress on the stalled list of measures to make its public finances sustainable.

“From the Greek side there was a strong statement that liquidity is getting really bad and there was an appeal to release some type of liquidity support before the eurozone finance ministers' meeting on April 24,” a eurozone aide said.

“But no one knows how this could be done — there is no willingness to provide support before there is some progress in terms of the reform program,” the official said.

Leftist Prime Minister Alexis Tsipras, elected in January on a promise to end austerity, is balking at reforms of the pension system and labor markets to which his conservative predecessor had agreed.

Greece's creditors — the eurozone and the International Monetary Fund — are using the leverage offered by its acute cash predicament to press for those measures to be implemented.

A European Commission spokesman stressed the importance for Greece of the finance ministers' meeting in Riga, telling reporters: “Obviously, everything that happens before April 24 in terms of reaching an agreement will be greatly welcome.”

Athens submitted a 26-page list of planned reforms last week but euro zone officials said they lacked key details and proper assessments of the financial implications.

The officials said trust was so low that ministers would want to see legislation going through the Greek parliament, not just promises, before they released more funds.

Finance Minister Yanis Varoufakis, speaking in Paris, accused the eurozone on Thursday of inflicting toxic medicine on his country, and starving it of cash.

“Tragically we find ourselves today in a similar situation,” he told an economic conference. “As a finance minister ... in order to create the liquidity which is necessary to see these negotiations through hopefully to a sustainable solution, I have to make the same request that we are allowed to issue T-bills over and above a certain limit to create the liquidity necessary to see us through to the end of the month or the next month or June, so as to be able to redeem payments to the former troika — to the IMF in this case.”

Secret memo

A Greek official said Athens would pay the 450 million euro ($485 million) loan installment to the International Monetary Fund later on Thursday. It is scraping together cash reserves from state bodies to pay wages and pensions due this month.

Separately, the policymaking governing council of the European Central Bank was holding a teleconference on Thursday to decide whether to extend and increase emergency liquidity assistance for Greece's banks, which have suffered big deposit outflows in the last four months.

A secret memorandum drafted by the Finnish Finance Ministry, one of the most hardline creditor countries, raised the prospect of Greece effectively being pushed out of the eurozone if fails to meet obligations under its 240 billion euro international bailout program.

The newspaper Helsingin Sanomat quoted the memo, dated March 27, as saying Finland must be prepared for the possibility that Greece would run out of cash before the end of June.

That could lead to a situation where “by silent approval of the other eurozone countries a process is started which in effect results in Greece being expelled from the euro,” it said. The finance ministry was not available for comment.

On the second day of a visit to Russia, Tsipras said in a speech at Moscow University that Russia could not provide an alternative “solution” for Greece's debt problems to negotiations in the euro zone framework.

But he called on the European Union to restore dialog with Moscow despite differences over Russia's role in Ukraine.

“It is impossible to build European security without Russia, let alone against it,” Tsipras told students. “In this context, we must ... restart the EU-Russia dialog in order to address global challenges, energy cooperation and to promote mobility among citizens.”