Officials ramp up negotiations in bid to clinch deal

Officials ramp up negotiations in bid to clinch deal

Finance Minister Euclid Tsakalotos and Economy Minister Giorgos Stathakis are to meet representatives of the country’s international creditors on Tuesday for talks on bank recapitalization and privatization, with another meeting already scheduled for Wednesday as the two sides intensify efforts to secure a deal.

The priority on Tuesday is to determine the course of action for Greece’s cash-strapped banks, which suffered a battering when the Athens Stock Exchange reopened on Monday after a five-week shutdown, and to agree the broad strokes of a bold program of sell-offs.

The aim of Wednesday's meeting is to conclude the “first phase” of negotiations and quickly move forward in a bid to clinch a deal before August 20, when Greece must meet a 3.2-billion-euro payment to the European Central Bank or face default again.

Government officials have indicated that they want to have a deal finalized and voted through Parliament by August 18 to allow adequate time for loans to be disbursed.

But in comments to Skai TV on Monday, Alternate Finance Minister Dimitris Mardas did not rule out the possibility of talks running over that deadline, which however remains the government’s “goal.” In that case, Athens would need to seek another bridge loan to cover its debt to the ECB.

For a deal to be reached, Greece must meet a series of creditor demands. As regards privatization, lenders want Greece to commit to completing all pending privatizations, including ports, airports and the site of the old airport at Elliniko as well as proceeding with new sell-offs.

As for Greek banks, talks on Tuesday are expected to focus on how to tackle nonperforming loans and on the process for further recapitalization. The lenders’ needs will be assessed on the basis of stress test results, which are expected by September 4. It is thought the four systemic banks will require at least 10 billion euros.

Another thorny issue that was discussed on Monday during a meeting between Labor Minister Giorgos Katrougalos and creditor envoys was pension reform. According to sources, creditors want the phasing out of early retirements, to which Greece has committed, to begin retroactively from July 1 as opposed to January 1, 2016.

The envoys are said to be particularly determined to stop the retirement of those aged between 50 and 55, and want the practice abolished by 2018. Leaving talks with the envoys on Monday, Katrougalos said that labor market reform will focus on European best practices and International Labor Organization standards.

Separately on Monday, the Finance Ministry declared that a legislative decree issued at the end of last week which allows the short-term recruitment of advisers was not drafted with the aim of hiring of foreign experts to help compile Greece’s next memorandum. The government is obliged to cooperate with "distinguished experts” on technical matters relating to bank recapitalization and the creation of a privatization fund, the ministry said.

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