Athens hopes for breakthrough

Greece is hoping that it will find enough common ground with its lenders to trigger an emergency Eurogroup before May 6, when the European Central Bank’s government board is due to meet next to decide on the provision of liquidity to Greek banks.

Wednesday is seen as a key day by the Greek government not just because it wants to alleviate its cash shortage problems as soon as possible but also because ECB officials could opt to increase the haircut that the central bank applies to the collateral offered by Greek lenders in exchange for liquidity.

Kathimerini understands that the ECB is working on three scenarios: Haircuts of 44 percent, 65 percent and 80 percent. The current discount applied to Greek banks’ collateral is 23 percent. Should the ECB choose the more drastic scenarios, local lenders would find it increasingly difficult to come up with the amount of collateral needed in order to maintain the flow of liquidity from Frankfurt.

The next key date after that is May 12, when Greece has to pay more than 700 million euros to the International Monetary Fund. This payment is due a day after the Eurogroup has its next scheduled meeting. The May 11 gathering of eurozone finance ministers is the latest point at which Greece hopes that its state liquidity problems will be resolved, at least temporarily.

Athens is hoping that over the next few days there will be enough progress during the Brussels Group negotiations, which began on Thursday, to allow the ECB to raise the 15-billion-euro limit on the value of T-Bills Greece can issue, as well as the ceiling on the exposure that Greek banks can have to them.

European officials, however, are skeptical about whether such a deal can be reached soon. They insist that the institutions want a staff-level agreement on the reforms Greece will adopt before there can be any moves to ease liquidity constraints. One European official told Kathimerini that negotiations between Greece and its lenders had only “just started” in earnest.

Athens and its creditors still have differences on some fiscal issues, pension reform, labor market liberalization and the foreclosures of primary residences.

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