European finance ministers met Monday to try to break a deadlock over whether to provide Greece the next batch of bailout loans, which it needs to avoid bankruptcy this summer, and forgive some of its debts.
International creditors agreed last year to give Greece an 86 billion euro ($98 billion) package of rescue loans – Greece's third bailout since 2010. But a review of how effective Athens has been in making required austerity measures was supposed to have been completed six months ago.
That review would pave the way for the release of the next part of the loan. The impasse is increasing pressure on Greek Prime Minister Alexis Tsipras, whose government has to make a 2.3 billion euro debt repayment in July.
"We need to make sure that we are on track regarding all the measures and the reforms and that could lead to in the coming week or weeks the next disbursement," the chairman of the 19-nation eurozone finance meetings, Jeroen Dijsselbloem, told reporters in Brussels.
Dijsselbloem said the thorny issue of restructuring Greece's debts would be debated. "We'll discuss when, if, under what conditions this could take place," he said. "But this is a first discussion well have on it. I don't expect any definite conclusions as yet."
Dijsselbloem said the ministers would return to the issue when they next meet on May 24.
In Athens, Greek government spokeswoman Olga Gerovassili underlined the importance of having the debt issue on the table Monday.
"There are powers in Europe that would rather not have discussed the matter," she said.
While the debt debate would be at a very preliminary level, any eventual agreement is likely to involve lower interest rates and softer repayment terms, rather than a reduction in the actual amount Greece owes its European creditors and the International Monetary Fund.
The so-called Eurogroup meeting of eurozone finance ministers comes after Greece's parliament approved Sunday a reform of the pension and tax systems.
The reform, which would raise social security and pension contributions and hike taxes for many people, has run into fierce resistance from unions, which have launched repeated protests and walkouts – including a three-day general strike since Friday.
"The Greek government has made tremendous efforts to reform its economy," said the EU's top economy official, Pierre Moscovici. "It's important for the Eurogroup to recognize that and for Greece to win back confidence, for investors and for growth."
Greece's economy has been hammered by six years of budget cuts that were required by creditors to reduce the country's public debt load. The country has needed bailout loans since it was locked out of international borrowing markets in 2010 amid investor worries about its public finances. About a quarter of the workforce is now unemployed.
Greek Labor Minister George Katrougalos has said the government would not accept "additional actions" to reduce government spending beyond what it agreed to last summer, when Athens abruptly abandoned its anti-bailout policies and signed up to the third bailout. It only did that after defaulting on its debt payments – which could happen again this summer without progress in the bailout negotiations – and to avoid a catastrophic exit from the 19-nation eurozone.
The IMF wants Greece to agree to the additional budget actions, which would be taken in case it misses its targets, but Greece and its other eurozone creditors are against that. The ministers were to discuss a "contingency" mechanism of additional measures that could kick in, should Athens fall short.
The IMF would also like the eurozone states to agree to write off some of the money Greece owes them. Many states, led by Germany, have so far rejected that notion, though they could look to help Greece by extending debt repayment dates and lowering interest rates further.