By Renee Maltezou
Greece and its international lenders are edging closer to a compromise on signing off on a review of bailout reforms which could unlock more aid to the country, government sources said on Monday, after marathon talks with creditors.
Just over 10 hours of overnight negotiations between Athens and its lenders – the European Commission, the European Central Bank (ECB), European Stability Mechanism and the International Monetary Fund – broke off shortly before 0400 GMT. They were scheduled to resume later on Monday.
“There are some small details to settle on the fiscal side of things … We are very close,” one government source said, adding that the sides still diverged over pension reforms and regulating non-performing loans.
The review has dragged on for months mainly due to a rift among the lenders over Greece’s projected fiscal shortfall by 2018 – initially seen at 3 per cent by the EU, 1 per cent by Athens and 4.5 per cent by the IMF.
Athens and its lenders have agreed to use 3 per cent as the baseline scenario in the Athens-based talks.
But the EU and the IMF are still at odds on whether Athens can achieve a 3.5 per cent primary surplus – the budget balance before debt service payments – in 2018, an official participating in the talks told Reuters.
Prime Minister Alexis Tsipras accused the IMF on Monday of continuing to insist on the application of wrong policies in Greece despite having admitted to mistakes in the two previous bailouts for the country that it co-financed.
“In Greece wrong policies were applied and it is a paradox that those who recognised that there were wrong policies, admitting their mistake, insist on applying the mistake,” Tsipras said.
The IMF, which will decide whether to co-finance Greece’s third bailout after the review and in light of how much debt relief Greece receives, believes Athens will miss its 2018 surplus target and settle at 1.5 per cent, even if it implements measures worth 3 per cent of GDP, the official said.
EU institutions believe the target is feasible.
A positive review will unlock up to five billion euros in aid. Athens needs the money to repay 3.5 billion euros to the IMF and the ECB in July, as well as unpaid domestic bills.
Tsipras, who has a fragile parliamentary majority, is aiming for a compromise before a euro zone finance ministers’ meeting on April 22.
He hopes the conclusion of the review will send a positive signal to markets and coax back investors, while a debt restructuring would convince Greeks that their sacrifices are paying off after six years of belt-tightening.