Greek creditors set to compromise on deal

Greece’s international creditors yesterday signalled that they were ready to compromise to avert a default even as Athens warned it might skip an IMF loan repayment due tomorrow.

Prime Minister Alexis Tsipras agreed in a telephone call with German chancellor Angela Merkel and French president François Hollande on the need for an immediate solution to the long-running debt negotiations involving a lower primary budget surplus target for Greece.

Their third call in a week took place shortly before Mr Tsipras flew to Brussels to meet senior European officials and hear the terms of a plan drawn up by the troika after a meeting of leaders chaired by Ms Merkel on Monday.

With time running out, and looking to draw a line under four months of acrimonious negotiations, the creditors have effectively come up with a take-it-or-leave-it offer.

However, Mr Tsipras has produced a plan of his own and said he intended to discuss that document in Brussels, calling on eurozone partners to show some “realism” and urging a deal that would let Greece escape from “economic asphyxiation”.

Hardline German finance minister Wolfgang Schäuble said an initial look at Greece’s reform suggestions indicated that talks aimed at securing an aid-for-reforms deal will take time. “I have no information that anything decisive has changed in terms of substance,” he said.

Looking for a compromise, the creditors suggest that Greece should post a budget surplus before interest payments of 1% of GDP this year and 2% in 2016, instead of 3% and 4.5% under the terms of the current plan, sources said.

The sources said the Greek government, elected in January pledging to end years of bitter austerity, had suggested a primary surplus of 0.8% this year and 1.5% next year.

However, the relatively small gap in headline numbers masks tougher unresolved issues on how to achieve the fiscal targets.

Athens has offered to curb early retirement to save on pension payouts but the lenders have been seeking cuts in supplementary pension benefits and an easing of private sector layoffs to make the economy more competitive.

It was also not clear if the creditors — eurozone governments, the IMF, and the ECB — had shown any flexibility in those areas.

Sounding more upbeat and conciliatory than Schäuble, Mr Hollande suggested an agreement was within reach. “We are a few days or hours away from a possible deal on Greece,” he said.

“Asking too much of Greece could stifle growth. But asking too little would have consequences for the eurozone as a whole.”

Reuters