NEWS

Greece to present reforms draft to creditors to unlock loans

Greece says it will discuss with its creditors on Thursday a draft bill of reforms it hopes will earn their approval and pave the way for the unlocking of vitally needed bailout funds.

The draft bill is expected to include measures proposed by Finance Minister Yanis Varoufakis during the negotiations with creditors, which have dragged on for over three months and raised concerns the country might not get the loans in time to avoid a debt default.

The bill will be discussed with representatives of the International Monetary Fund, European Central Bank and European Commission in Brussels on Thursday, two government officials said. The Greek Cabinet is also due to discuss it in Athens.

“The aim of the negotiation at all levels is the achievement of a mutually beneficial agreement,” one official said Wednesday, speaking on condition of anonymity in accordance with government regulations. “The Greek government is optimistic that this will be achieved soon.”

Time is running out. Greece faces nearly 1 billion euros ($1.1 billion) in debt repayments to the IMF by May 12. It is expected to be able to meet the repayment as well as this month’s state pensions and salaries if it raises as much as it expects from a plan to use cash reserves from state enterprises.

But Greece will have trouble finding the money to keep the country running and pay off debts for much longer, as it is locked out of international borrowing markets by sky-high interest rates, which reflect investor fears of a default.

Uncertainty over Greeces future has grown since late last year, when early elections were called for January, and led to a slow-motion bank run.

A report released Wednesday showed deposits have fallen by almost a fifth since December, from 160.3 billion euros to 134 billion euros by April.

The report by the Parliamentary Budget Office noted the economy had once more begun to shrink in the last quarter of 2014 after a brief period of growth.

Businesses that survived the five-year crisis are now facing funding difficulties and “huge problems with foreign clients and suppliers,” it said.

“If the uncertainty surrounding the political and economic situation continues, the situation will deteriorate dramatically,” the report said.

Speaking on local radio, Deputy Prime Minister Yannis Dragasakis said he believed at least an interim agreement would be reached in the first few days of May.

“Today we are seeking a solution. But ‘any solution’ is not good enough. It must be a viable solution,” Dragasakis told Sto Kokkino radio.

Prime Minister Alexis Tsipras said this week he expects a deal to be reached by May 9, in time for the next finance ministers’ meeting two days later.

The exact contents of the draft bill have not been announced, but are expected to include some tax reforms. Greece hopes they will be sufficient for its creditors to approve the disbursement of the final 7.2 billion euro ($7.9 billion) installment from its 240 billion euro bailout.

After long delays, hopes rose this week that progress was finally being made.

On Tuesday, the European Commission said talks had become “more productive and efficient” since a weekend meeting of eurozone finance ministers, where Varoufakis came under intense pressure from his colleagues.

[AP]