Top EU officials eye deal by end-May as technical-level talks make gradual progress

As Greek government officials expressed their confidence that a deal with the country’s creditors is close, top European officials indicated Tuesday that although there has been progress in negotiations, an agreement is unlikely before the end of the month.

In comments during an interview with Star channel that began late on Monday and finished in the early hours of yesterday morning, Finance Minister Yanis Varoufakis said he believed a deal was likely “in about a week.” At around the same time the so-called Brussels Group of negotiators were pondering a Greek proposal for overhauling value-added tax rates. According to government sources, progress has been achieved on the technical level with the two sides converging on a primary surplus target for this year of about 1 percent of gross domestic product. Differences remain however on the issues of pension and labor reform. Another teleconference was due late last night with face-to-face talks expected to take place in Brussels Wednesday.

Addressing a joint press conference in Berlin, German Chancellor Angela Merkel and French President Francois Hollande said talks must be accelerated to produce an agreement by the end of May.

“We must speed things up,” Hollande said, adding that Greece has “financial needs so financial resources need to be found.” Merkel also underlined the need for an agreement by the end of May. Both leaders said they were prepared to meet with Greek President Alexis Tsipras this week on the sidelines of a European Union leaders’ summit in Riga.

European Commission President Jean-Claude Juncker said he expected a deal by late May or early June; he also rebuffed reports that he had proposed a compromise deal to Athens.

German Finance Minister Wolfgang Schaeuble said talks were moving too slowly despite progress in “sub-areas,” according to Reuters. Eurogroup President Jeroen Dijsselbloem, for his part, told RTL Z channel: “We are intensively busy with the Greeks and we are making progress, I would say cautiously.” He added that it was “not a given” that a breakthrough could be achieved in Riga.

According to sources, Tsipras is keen to secure political support in Riga that would allow eurozone finance ministers to call an extraordinary summit – preferably next Monday which, however, is a public holiday in Brussels. Greece hopes that a Eurogroup meeting could give the green light for the release of much-needed rescue loans. The hope is for a portion of 3.7 billion euros in European loan money to be released as the International Monetary Fund appears unwilling to release its 3.5 billion euros unless the reforms proposed by Greece are similar to those promised by the previous government. At the very least Athens hopes that a positive Eurogroup statement could prompt the European Central Bank to allow Greece to issue more treasury bills, which would tide the country over until the two sides hammer out a broader pact in summer. That deal should include a debt restructuring and an investment plan, according to Athens.

Greece will struggle to meet a 300-million-euro repayment due to the IMF on June 5 without the release of loan money. Labor Minister Panos Skourletis conceded Tuesday that “things will be difficult” if an agreement is not reached by then.

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