ECONOMY

Creditors chase consensus with Greece to unlock more aid

Greece and its creditors remained at loggerheads with time running out to unlock aid in exchange for economic reforms and avert a default.

The sides haven’t even agreed on fiscal targets for this year, let alone on measures to meet those goals, an official representing the creditors said Monday, asking not to be named as talks aren’t public. Euro-area finance ministers said in February that a list of measures must be agreed upon by the end of April.

European peers want Greece to do more to revamp its debt- burdened economy and progress will be reviewed on April 24 in Riga, Latvia, when finance ministers from the currency bloc will discuss the showdown. European Commission Vice President Valdis Dombrovskis said in an interview in Washington that creditors might need to wait until mid-May to see what Greece can deliver.

“The situation with Greece needs to be resolved soon,” Cypriot Finance Minister Harris Georgiades said in a Bloomberg TV interview on Monday. “It would be a negative development if no progress is made at the meeting in Riga.”

That may not happen. Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem said in Washington on Saturday that a deal won’t be ready by the Riga meeting.

In Greek Court

Greek bonds fell as yields on three-year notes rose 95 basis points to 27.7 percent as of 12:41 p.m in Athens. With the country running out of cash, credit-default swaps suggested there is about an 84 percent chance of Greece being unable to repay its debt in five years, compared with about 67 percent at the start of March, according to CMA data.

A default on the country’s 313 billion euros ($336 billion) of debt and an exit from the euro would be traumatic for the euro area and plunge Greece into a major crisis, European Central Bank governing council member Christian Noyer told French newspaper Le Figaro in an interview published Monday.

“The ball is in the court of the Greek government,” which must quickly make full economic reform proposals, he said.

Greek officials, including Deputy Prime Minister Yannis Dragasakis, remained defiant over the weekend, saying the government won’t betray its electoral promises and worsen the pain that came from previous austerity measures.

“We want a viable solution within the euro,” Dragasakis said in an interview with To Vima newspaper. Still, “we won’t budge from our red lines.” Snap elections or a referendum are possible should talks stall, Dragasakis said.

Greece won’t cut wages and pensions, introduce new taxes or sell assets, Alternate Health and Social Security Minister Dimitris Stratoulis told Athens-based Skai TV on Saturday.

‘Blackmail’ Greece

While “so-called” partners, including unidentified International Monetary Fund officials, want to “blackmail” Greece into adopting measures that would hurt the working class, “we won’t betray the people’s mandate,” Energy Minister Panagiotis Lafazanis said, according to an interview published Sunday in Athens-based Real News newspaper.

Greece and its creditors of the IMF, the ECB and the European Union are still far from agreeing reforms needed to unlock tranche aid, IMF Europe chief Poul Thomsen said Monday in an interview with Handelsblatt.

‘Far Apart’

The next milestone is the Eurogroup meeting on May 11, which will come just one day before Greece faces a payment of 780 million euros to the IMF.

“Today’s problem is to get down to reforms that need to take place,” IMF Managing Director Christine Lagarde said Sunday in Washington. Debt isn’t the issue in the short term as servicing costs are “extremely low” and “extended over an unbelievably long maturity,” she said.

In a sign that patience may be wearing thin, Dijsselbloem said in an interview published Monday with De Telegraaf newspaper that the situation can be isolated. Greece makes up “only” 2 percent of the European economy and there will come a time when the country runs out of cash, he said.

“The Syriza-led government will carry out the reforms the Greek people need, not ones requested by our creditors,” Alternate Health Minister Stratoulis told Skai TV. The country won’t be pressured “by euro-exit threats.”

[Bloomberg]