Race for a deal to secure next tranche of Greek aid
Eurozone ministers hail progress in reform talks as debt payments loom for Athens
Greece and its bailout monitors are set to hold further talks on Wednesday in an effort to seal a deal on pension cuts and labour market reforms needed to unlock the next chunk of aid from Athens’ €86bn bailout programme.
Jeroen Dijsselbloem, president of the eurogroup of eurozone finance ministers, said on Twitter that Tuesday night’s negotiations in Brussels, which finished in the early hours of Wednesday, had “made good progress”. Officials said the ministers planned to continue the talks later on Wednesday by teleconference.
Athens and its creditors are racing to secure a deal ahead of a series of large debt repayments, totalling more than €6bn, that Greece must make in July.
An agreement would be a key stepping stone towards getting the International Monetary Fund on board as a financial partner in the bailout, something Germany says is essential if Athens is to receive further tranches of aid.
Pierre Moscovici, the EU’s economy commissioner, told the European Parliament on Tuesday that a rapid agreement was “imperative,” as delay risked fiscal damage to Greece.
“The Greek people have suffered a lot and need to see the light at the end of this long tunnel of austerity,” he said.
According to one EU official, reaching the July deadline without a further tranche of bailout loans would leave Greece’s economy “in such a state that all parameters of decision-making would have to be revisited”.
Officials are aware that even after a deal has been reached on a reform package, further difficult terrain will have to be crossed before the IMF will consider joining the bailout, including politically thorny discussions on debt relief.
Deposits have continued to be pulled out of Greek banks this year amid uncertainty over the bailout, with more than €2bn withdrawn in January and February as fears grew of tighter capital controls.
The broader economy has also felt the pain from a stalled injection of bailout cash.
Unemployment has remained stuck at 23 per cent, the highest in the eurozone and defying a broader recovery across the bloc, while the country’s manufacturing sector has shrunk for seven consecutive months.
The Greek economy contracted 1.2 per cent in the fourth quarter of last year, the worst performance since the country was brought to the brink of default in the summer of 2015.