Greece says deal with creditors is close; markets cheer

Greece’s prime minister said Wednesday that his country is close to reaching a deal with its bailout creditors, prompting European stock markets to jump on hopes of a breakthrough in the slow-moving, often acrimonious talks.

Alexis Tsipras spoke shortly before Greek negotiators were due to meet in Brussels with representatives of the bailout creditors – whose cash has kept Greece from bankruptcy for the past five years.

“We have taken very many steps. We are in the home stretch, close to the final agreement,” Tsipras told reporters, after a meeting at the finance ministry in Athens.

Greek stocks rallied earlier Wednesday after government officials said negotiators will start drafting a staff-level agreement with bailout creditors in Brussels to unlock aid that would allow the country to make a debt repayment as soon as next week.

The main Athens stock index rallied to close up 3.6 percent, with most of the gains registered just before closing. Other European markets also posted gains, with Germany’s up 1.3 percent and Frances bouncing 2.1 percent.

Earlier, a Greek government official said the putative deal would include debt-restructuring, sales tax reforms, balanced budgets and a cut in early retirements.

Since the start of the bailout in 2010, Greeces creditors – the International Monetary Fund, European Commission and European Central Bank – have been releasing rescue loans on condition the country implements strict austerity measures.

Tsipras’ radical left-led government needs the reform-for-cash deal, which has proved elusive since its election in late January, by June 5, when it has to repay some 300 billion euros to the IMF.

Athens has said it lacks the funds to pay its creditors unless a deal is struck in time. Failure to do so could set Greece on a slippery slope that could see it impose limits on money withdrawals to avoid a bank run, and eventually even leave the eurozone.

The government official, who spoke on customary condition of anonymity, insisted that the deal would not involve further pension or salary cuts.

The Brussels meeting was delayed because the Greek negotiators’ plane was diverted to Dusseldorf, Germany, due to air traffic control problems at Brussels airport.


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