As negotiations continue at the technical level in Brussels, Greek government officials have significant meetings planned on Tuesday in European capitals in a bid to tackle the country’s looming cash crunch even as the International Monetary Fund raises the pressure.
The IMF reportedly suggested that it would pull out of Greece’s loan program if steps are not taken to lighten the country’s huge debt burden. Of the 7.2-billion-euro installment in pending aid that Greece has been seeking to secure from creditors, 3.5 billion euros is an IMF tranche. A report in Monday’s Financial Times said that IMF official Poul Thomsen warned eurozone finance ministers at a summit in Riga last month that Greece would post a primary deficit of up to 1.5 percent of gross domestic product. This contrasts sharply with a target set by creditors of 3 percent of GDP which Greece wants to reduce to 1.5 percent of GDP. Billions of euros in measures would be required to plug the gap. But, according to the report, Thomsen underlined the need for debt relief.
Shortly after reports that the IMF has upped the pressure in debt talks, Tsipras “discussed matters relating to the current negotiations” with the Fund’s chief Christine Lagarde, his office said.
The development comes as Greece aims to seek a liquidity boost from another of its creditors, the European Central Bank. Deputy Prime Minister Yiannis Dragasakis is to meet with European Central Bank President Mario Draghi in Frankfurt on Tuesday afternoon along with Euclid Tsakalotos, the alternate foreign minister who has been tasked with “coordinating” Greece’s negotiating team. The visit comes just a day before the ECB’s governing council is to decide on whether to extend more emergency liquidity to Greece even as speculation mounts that the ECB will up pressure on Greece by increasing the haircut on collateral that is accepted in exchange for funding. Athens has a much more optimistic plan in mind: It aims to push the ECB to raise the ceiling on the amount of treasury bills Greece is allowed to issue.
As Dragasakis and Tsakalotos meet with Draghi in Frankfurt, Greece’s Finance Minister Yanis Varoufakis is due in Paris Tuesday morning for talks with his French counterpart Michel Sapin. He is then to fly to Brussels for talks with European Economic and Monetary Affairs Commissioner Pierre Moscovici.
The flurry of meetings comes as Greece braces for a fresh series of repayments to creditors – 200 million euros in interest to the IMF tomorrow and more than 700 million euros, also to the Fund, on May 12. The state must also pay another 2.5 billion euros in salaries and pensions this month.
In view of the fact that the progress in technical-level talks has not been such to warrant the release of funding at the May 11 Eurogroup, Greece is hoping that contacts at the political level might help alleviate the state’s immediate funding needs. Government spokesman Gavrill Sakellaridis told reporters on Monday that negotiations were progressing but that “liquidity is a pressing issue.”