Greece faces ‘intensive work’ as deadline looms

European leaders yesterday told Greece to return to the negotiating table for “intensive work” to wrap up a reform agreement before cash runs out, sidestepping Athens’ demand for a comprehensive, long-term solution to its troubles.

With his country risking default in as little as two weeks, Greek Prime Minister Alexis Tsipras flew to Riga to press German Chancellor Angela Merkel and French President François Hollande for a political push to break the impasse in technical-level talks with the EU and IMF.

The leaders offered help, but told Tsipras to get back to focusing on talks with the troika, which has been bankrolling Greece since it nearly went bankrupt in 2010.

“It was a very friendly, constructive exchange, but it’s also clear that there must be more work with the three institutions. There is a lot to do,” Ms Merkel told reporters on the sidelines of an EU summit in Riga.

She said France and Germany had offered to help whenever it was needed, but said: “The conclusion needs to be found with the three institutions and there needs to be very, very intensive work.”

Acknowledging Greece’s dire financial state as its cash runs dry, Mr Hollande said the focus should be on a quick deal that allows the reopening of aid so Greece can be sure of making payments to the IMF early next month.

“Everyone knows the deadline, because it’ll be around June 6 or 7 that Greece will need liquidity to meet certain repayments,” Mr Hollande said.

“That doesn’t mean that other phases cannot be prepared but what interests the chancellor and I is what responses Greece can make to release the funds which would give Greece the means to pay the amounts it owes in June.”

Greece’s government put a brave face on the outcome of the talks, voicing optimism it could reach a deal in as little as 10 days — before the next IMF payment falls due on June 5. “We think conditions have matured for (talks) to progress further and in the next 10 days, in May, for the deal to be sealed,” government spokesman Gabriel Sakellaridis told Skai TV, adding that a deal would allow the ECB to include Athens in its bond-buying programme.

Mr Tsipras said he was “very optimistic” of reaching a “long-term, sustainable, and viable solution without the mistakes of the past”. He later held talks with European Commission president Jean-Claude Juncker, who agreed a deal was “feasible” in the coming weeks.

Since storming to power in January, Mr Tsipras’s leftist-led government has bitterly fought and then struggled through four months of talks with the EU and IMF on a deal that could release up to €7.2bn in remaining aid.

The initial acrimony that marked talks with lenders — who were aghast at the new government’s unabashed determination to end austerity and bailouts keeping Greece afloat — have largely abated.

However, the talks remain deadlocked over pensions, labour reform, fiscal targets, and increases in Vat.

Athens has proposed Vat rates of 7%, 14%, and 22% in an effort to redistribute the tax impact and lighten the burden on lower income groups, the government spokesman said.

Lenders want rates of 11% and 23% instead and are pressing for an increase in Vat on energy to 23%.

Reuters


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