Brussels talks try to end Greece bailout impasse

Brussels, Belgium | AFP |by Jan HENNOP / Alex PIGMAN-

Eurogroup chief Jeroen Dijsselbloem moved Friday to calm fears over Greece's bailout programme as he met key players in Brussels to unblock an impasse with Athens and the IMF.

  Greece is caught up in a complicated row with its eurozone creditors and the International Monetary Fund over debt relief and budget targets that has rattled markets fearful a new debt crisis could be back on the horizon.
"The stories of crises are greatly exaggerated," Dijsselbloem, who is also Dutch finance minister, told journalists at a weekly cabinet meeting in the Hague before heading to Brussels.
"Reform in Greece is going slowly, but indeed it's going in the right direction," he said.
The Greek government faces debt repayments of 7.0 billion euros ($7.44 billion) this summer that it cannot afford without defusing the months-long feud that is holding up new loans from Greece's 86 billion euro bailout.
In an effort to end the quarrelling, Dijsselbloem was meeting Greek Finance Minister Euclid Tsakalotos, along with Klaus Regling of the European Stability Mechanism and IMF and EU officials.
Greece "every now and then needed a push," Dijsselbloem said in The Hague. "If I can do that today, then that's welcome."
Sources close to the negotiations said the point of the meeting was to bring the sides closer together so that teams could complete negotiations in Athens in time for a meeting of eurozone finance ministers on February 20.
The central focus of the dispute is whether Greece can deliver a primary balance, or a budget surplus before debt repayments, equal to 3.5 percent of GDP for several years after the completion of the current, third bailout in 2018.
That is far higher than the 1.5 percent that the IMF says is feasible, and attaining 3.5 percent would require a fresh round of reform commitments to balance the public finances that Athens is baulking at.
The IMF, led by its hard-charging chief Christine Lagarde, believes Athens and Europe are relying on overly optimistic calculations on Greece in an effort to rule out major debt relief, which is firmly opposed by Germany.
The IMF fund this week warned that Greece's debt projection was "explosive" and that deep debt relief was needed given the doubts about future growth.
The differences have delayed the next bailout payment, angering Athens, even though the leftist government backs the IMF call for debt relief.
Earlier this week, Tsakalotos slammed the IMF's view saying it "fails to do justice" to his country by underestimating growth and the progress made through years of sacrifice.
But the IMF's Lagarde defended the report, saying the fund in the review of the Greek economy "tried in full honesty to be ... ruthless truth tellers" despite the criticism.
The report highlighted that despite a "massive effort" by the Greek people, some of the reforms are incomplete, including changes to the pension and income tax systems, where too few people bear most of the tax burden, Lagarde said.

Friday, February 10th 2017

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