NEWS

Greece hopes to conclude bailout talks by Tuesday

TAGS: Euro, Politics, Economy

Greece hopes to conclude negotiations with international creditors by early Tuesday at the latest, a Greek official said as talks continued in Athens on a new multi-billion euro bailout.

Greece's finance and economy ministers were locked in negotiations with representatives of creditors on Sunday. Greek officials have previously said they expect the bailout accord to go to the country's parliament for approval by Aug. 18.

"Efforts are being made to conclude the negotiations, the horizon is by Monday night or early Tuesday," said a Greek official who declined to be named.

"When the new bailout comes to parliament for a vote it will be one bill with two articles - one article will be the loan agreement and the MoU (memorandum of understanding) and the second article will be the prior actions," the official said, referring to measures Greece needs to take for the bailout accord to take effect.

The negotiations began on July 20. A senior Greek finance official told Reuters the aim was for a meeting of euro zone finance ministers to review the accord on Friday, Aug. 14.

Athens is negotiating with European Union institutions and the International Monetary Fund for up to 86 billion euros ($94 billion) in fresh loans to stave off economic collapse and stay in the euro zone. The bailout must be in place by Aug. 20, when Greece has a repayment falling due to the European Central Bank.

Stocks Plunge

Greece and its creditors still need to decide exactly how much money will be required for the bailout, which will be the nation’s third in five years, as well as what reforms will have to be concluded before any money is released, one of the people said.

The headway comes as some members of the 19-nation common currency express skepticism that a deal can work. Finnish Foreign Minister Timo Soini said over the weekend that his government is ready to discuss a new aid plan for Greece but that “we should admit that this isn’t going to work.”

Last week, Hans Michelbach, a Bavarian lawmaker who has argued against a deal with Greece, said he didn’t believe a rescue program could be reached in time and other financing arrangements would be needed.

The Athens Stock Index, which reopened Aug. 3 after being shuttered for five weeks, fell 15.2 percent for the five days ended Aug. 7 to 676.33, just shy of its lowest closing level in three years. A measure of Greek banks fell 58 percent last week, reaching the lowest closing level since 1995 on Aug. 5.

Even as the European governments are racing to cinch an agreement before Greece needs to pay 3.2 billion euros to the ECB on Aug. 20, the situation isn’t as dire as it was earlier this summer; if the leaders fail to disburse the funds in time, Greece could still request a short-term loan from a European fund that has about 5 billion euros available.

[Reuters & Bloomberg]

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