Greece scrambles to avert fiscal crisis

Greece stepped up diplomacy with eurozone partners, yesterday, to try to avert a potentially catastrophic funding crunch this month, when it must make a big debt repayment to the IMF as cash reserves dry up.

Ministers were travelling to Frankfurt, Brussels and Paris to plead for a loosening of the financial stranglehold on Athens after leftist Prime Minister Alexis Tsipras spoke by telephone to German Chancellor Angela Merkel, Europe’s pre- eminent leader.

“They discussed the course of the negotiations in Brussels and exchanged views on the issues of Greece’s deal with its lenders,” a Greek government official said of the call on Monday night, without elaborating.

Intensive talks continued with the IMF, European Commission and ECB on a cash-for-reform deal but there was no sign of a breakthrough on key differences over pensions, labour reform and the minimum wage.

In a goodwill gesture, a senior privatisation official said Athens was ready to finalise a €1.2bn deal with German operator Fraport to run regional airports and to reopen bidding for a majority stake in the port of Piraeus.

European Economics Commissioner Pierre Moscovici said the aim was for eurozone finance ministers to be able to officially register “strong progress” in the negotiations when they meet next Monday but did not suggest a deal was possible by then.

The political uncertainty prompted the Commission to slash its forecast for 2015 Greek economic growth to 0.5% from 2.5% just three months ago.

It also cut its estimate for Greece’s primary budget surplus before debt service.

“The fact that negotiations are still going on without having been concluded after more than three-and-a-half months, all that has an impact on expectations for growth and public finances in Greece,” Moscovici told a news conference.

Greek Deputy Prime Minister Yannis Dragasakis was due to meet ECB chief Mario Draghi in Frankfurt to urge the central bank to increase a liquidity lifeline for Greek banks and permit them to buy more short- term treasury bills, easing the government’s immediate funding crunch.

Greece has to repay €970m to the IMF by May 12 and has commandeered cash reserves from municipalities and government bodies to scrape together the funds.

ECB policymakers will hold their weekly review of emergency lending assistance to Greek banks today amid pressure from hardliners, led by Germany’s Bundesbank, to tighten the collateral terms, ECB sources said.


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