‘Deal in sight’ for bailout plan

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Published: Thursday 4th June 2015 by The News Editor

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Greece’s prime minister has said he found a constructive approach during a showdown with creditors in Brussels and all sides insisted talks to unlock crucial bailout loans and save the country from financial disaster would continue within days.

Even though Greece is running out of cash and faces more debt repayments as soon as Friday, Alex Tsipras still found a lifeline to keep the momentum for more negotiations going.

“I believe that, in any case, agreement is in sight but we need to conclude the discussions with a realistic point of view,” Mr Tsipras said.

French president Francois Hollande said ahead of the Brussels talks that the negotiations were at least heading in the right direction: “We are some days, not to say some hours away from a possible agreement.”

Greece has been negotiating for four months with its creditors over what budget reforms it should make to get the 7.2 billion euro (£5.3 billion) in loans that are left over in its bailout fund.

The meetings are part of a string of high-level diplomatic efforts to bring the negotiations to a successful end.

Asked whether he would be able to make the next repayment to the International Monetary Fund, Mr Tsipras said: “Don’t worry about it.”

After his dinner with EU Commission chief Jean-Claude Juncker, Mr Tsipras stressed the positive.

“The Commission showed a constructive intention to reach common ground,” he said. “Discussions will continue in coming days.”

At the same time, Mr Tsipras maintained he would continue to defend the poor and needy in the face of calls for more austerity reforms to unlock bailout funds.

He said “proposals such as cutting supplementary payments to people with very low pensions, or increasing VAT on power bills by 10 percentage points are proposals that, naturally, lack any basis for us to discuss them”.

Mr Tsipras also spoke by teleconference with Mr Hollande and German chancellor Angela Merkel ahead of his meeting with Mr Juncker, a Greek government official said.

The three agreed on the need for Greece to have lower primary surpluses – the budget balance without taking into account debt servicing.

“We are very close in an agreement in the primary surpluses, that means that all the sides agreed to go further without the tough austerity measures of the past,” Mr Tsipras said.

Lower primary surpluses than those initially demanded under Greece’s five-year bailout have been one of Athens’ main requests, although it appears to have been the easiest to overcome in the negotiations.

Sticking points appear to have been labour and pension reforms, as well as some changes to consumer tax.

The eurozone’s top financial official, Jeroen Dijsselbloem, was also in Brussels and met Mr Juncker and Mr Tsipras. He was less upbeat than others going into the meeting, saying: “We still have a lot of work to do.” But he also came out saying the talks would continue within days.

Greek markets were rising on hopes of a deal, with the main stock index closing up 4.1%.

Time is pressing. Greece must repay 1.6 billion euro (£1.2 billion) to the IMF this month alone.

The first instalment of just over 300 million euro (£220 million) is due on Friday, with other instalments on June 12, 16 and 19. Although Athens insists it intends to repay its debts, it is unclear how much longer it will be able to do so without outside help.

One option Greece could choose is to bundle this month’s IMF payments into one on June 30, giving more time for negotiations. While allowed under IMF regulations, the option is rarely used.

Without bailout funds, Greece could eventually default on its debts and crash out of the euro, possibly pushing Europe and potentially the global economy into turmoil.

“We are working with high pressure” to find a solution, Ms Merkel said in Berlin.

Mr Tsipras said he submitted his proposal to creditors on Monday night but gave no details of what fiscal reforms Greece was suggesting in return for its final bailout funds.

Greece needs the loans because it is locked out of the international bond markets as wary investors demand prohibitively high interest rates to lend it money. The country has not received bailout funds since August.

Published: Thursday 4th June 2015 by The News Editor

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