There are at least three key issues that Greece and its lenders have to resolve in the coming days, otherwise preparations will have to begin for a new bridge loan to ensure that Athens does not miss a payment to the European Central Bank on August 20.
“We still have to settle three or four issues at a technical level,” Finance Minister Euclid Tsakalotos said on Wednesday after a new round of talks with representatives of the European Commission, European Central Bank, European Stability Mechanism and International Monetary Fund. “These matters will require a little more time.”
The main obstacles to an agreement at the moment are the timeline for reforms, privatizations and the recapitalization of Greek banks.
On the first issue, Greece and its lenders have yet to decide when specific reforms will have to be implemented. It is thought some prior actions will be passed through Parliament at the same time as the agreement for the third bailout but others will be adopted later in the year.
With regard to privatizations, there is no agreement yet on how the new fund that Greece has to set up will operate. It appears the creditors are insisting that the current sell-off fund complete the projects it had lined up rather than transfer them to the new body.
The details of the planned recapitalization of Greek banks has not been finalized either. The institutions favor completing the process by the end of the year and seem to want to avoid a bail-in of depositors, as does the government.
“We are in the final stretch,” said Prime Minister Alexis Tsipras during a visit to the Agricultural Development Ministry. “Despite the difficulties we are facing, we hope this agreement can end uncertainty on the future of Greece.”
European Commission President Jean-Claude Juncker also appeared hopeful of progress this month, if not necessarily by August 20, when a 3.2-billion-euro Greek bond held by the ECB matures.
“All the reports I am getting suggest an accord this month, preferably before the 20th,” he said, adding that another round of bridge financing would have to be arranged if the deadline is not met.