BUSINESS

Athens, lenders resume talks on Greek bailout review

TAGS: Economy, Diplomacy

Greece and its lenders resumed long-stalled talks in Athens on Tuesday about reforms Greece needs to adopt to keep bailout funds flowing and the crisis-hit nation financially afloat.

The review has dragged on for months, in large part due to a rift between the European Union and the International Monetary Fund over Greece's bailout performance and its fiscal goals next year and beyond when the current bailout program expires.

Government ministers and technocrats were tight lipped as they gathered at a central Athens hotel for negotiations. Members of a left-wing trade union, PAME, said they had scheduled a protest there on Wednesday evening.

"Today we will be examining the fiscal gap and any steps which should be taken after 2018," a government official said.

The uncertainty surrounding Greece's bailout talks has revived fears of a new financial crisis in the euro zone, just as investors' nerves are jarred by unpredictable election races in the Netherlands, France and Europe's paymaster, Germany.

Greece does not need loans until the third quarter, but if the bailout funds are not dispersed in time Greece will face an elevated risk of defaulting on debt repayments worth about 7.5 billion euros in July.

Europe says Athens is on track to meet its 2018 target for a 3.5 percent primary surplus - which excludes debt servicing costs.

The IMF, still undecided on whether it will participate in Greece's third rescue package, says Athens cannot meet its targets unless it is granted further debt relief and adopts extra belt-tightening measures.

To help break the impasse, the leftist-led government last week agreed to pre-legislate unpopular reforms, including changes in income tax and pension spending, that would come into effect in 2019.

Prime Minister Alexis Tsipras' government, whose popularity is sagging, wants to conclude the review swiftly, hoping that the country will be included in the European Central Bank's bond-buying program and return to bond markets this year.

[Reuters]

 

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