BUSINESS

Bailout talks resume with aim of agreement by Thursday

TAGS: Economy, Euro

Greece and its lenders were due to resume talks on Monday with the aim of achieving a so-called Staff Level Agreement that could be rubber stamped by eurozone finance ministers at an extraordinary Eurogroup on Thursday.

The first goal of the talks is to agree on the 5.4 billion euros, or 3 percent of gross domestic product, of fiscal measures that form the main part of the package.

The bulk of these measures have been agreed but another 70 million euros in savings are needed from auxiliary pensions, a compromise is being sought on the tax-free threshold and Greece and its lenders need to reach a compromise on which non-performing loans will not be sold by banks.

Once these issues have been settled, attention can move to the extra package of 3.6 billion euros, or 2 percent of GDP, in stand-by measures that have been requested by Greece’s creditors.

Athens is searching for a mechanism that will lead to automatic spending cuts should it not be on course to meet the target of producing a primary surplus of 3.5 percent of GDP in 2018. It is not clear yet exactly how this would work or if the lenders are prepared to accept across-the-board cuts rather than targeted interventions.

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