Brussels meeting possible as creditors prepare proposal


Speculation swirled late Thursday that Finance Minister Euclid Tsakalotos would meet with representatives of Greece’s international creditors in Brussels on Friday in a bid to break a deadlock in bailout negotiations.

According to sources, creditors are preparing a final proposal for Athens foreseeing Greek authorities adopting fiscal measures equal to about 2 percent of gross domestic product.

The pressure from Greece’s creditors for additional measures and the apparent absence of a clear plan as regards the government’s next steps have fueled a sense of uncertainty and prompted apparently contradictory statements by government officials.

Top-ranking government officials appeared to be mostly on the same wavelength on Thursday. Despite widespread speculation that the government is prepared to lower the tax-free threshold, Economy Minister Dimitris Papadimitriou insisted, in comments to the Wall Street Journal published Thursday, that authorities would do no such thing.

Parliament Speaker Nikos Voutsis struck a similar tone, telling the TVXS news website that the government would not accept any measures beyond those agreed in 2015 and 2016.

However, one SYRIZA MP, Dimitris Vettas, suggested that the government could legislate contingency measures, in line with creditors’ demands rather than risking increasing uncertainty. “We could vote for an agreement with light contingency measures, measures that would be offset so that society does not suffer,” Vettas told ANT1 TV, noting that the key goal was “for the review to finish and for us to move forward,” referring to a stalled bailout assessment by international monitors.

Already, the growing sense of uncertainty fueled by the impasse in negotiations has taken its toll. Greek banks have been bombarded with questions by worried depositors and a trend in savings returning to banks has reversed, sources say. In total, deposits have plunged an estimated 1.5 billion euros since the beginning of this year, according to sources.

Bank sources warn that unless the bailout review is completed swiftly and renewed speculation about a possible Greek exit from the euro quashed, capital controls that have been loosened since their introduction in the summer of 2015 will have to be tightened again.

European officials and the International Monetary Fund reiterated their positions vis-a-vis Greece on Thursday. The head of the European Stability Mechanism, Klaus Regling, said in an article in the Financial Times that the solution for Greece is to be found in the implementation of reforms, not debt relief.

IMF spokesman Gerry Rice meanwhile insisted that debt relief is necessary but that the Fund’s continued support for Greece depends on reforms.