Rejecting a Greek request for an extraordinary EU summit to discuss its troubled bailout programme, European council president Donald Tusk instead urged eurozone finance ministers to resume talks that would avert further turmoil. Greece faces default if it fails to receive the necessary loans to cover €3.5 bn in maturing debt in July.
In a repeat of last year’s heady days, the Greek government is scrambling to raise funds to ensure payment of salaries and pensions in May.
The reserves of state entities and pension funds have effectively been sequestered with officials demanding deposits be placed in the central bank on short-term loan to cover looming shortfalls.
Greece’s prime minister appealed for the emergency EU summit on Wednesday after Athens and its creditors failed late Tuesday to resolve differences over the extent of budget cuts and reforms the debt-stricken state must make in return for rescue loans.
Speaking in Paris after talks with his French counterpart Michel Sapin on Wednesday, Eurogroup president Dijsselbloem said a new meeting would be lined up in the weeks ahead. “I don’t have a deadline, although there is a sense of urgency that we all share, so we’ll have to see whether it can be next week or ultimately the week after,” he told reporters. “There are practical issues that many countries have, with national holidays next week.”
Negotiations have been deadlocked for months. Initially it was hoped the review – the first since Greece signed up to a third, €86bn bailout – would be completed in October, allowing badly needed loan instalments to be disbursed.
The lenders went back on their agreement
Greek officials insist that a package of austerity measures worth €5.4bn – or 3% of GDP – that the government accepted to enact when it signed up in August to the bailout has been agreed. The measures, which include tax increases and the overhaul of the pension system, have formed the bulk of negotiations.
But this month the IMF made the dramatic move of demanding that Greece would also have to legislate additional “contingency measures” worth €3.6bn, or 2% of GDP, to be enforced in the event that it failed to meet fiscal targets.
IMF officials said the need for extra assurances emanated from differences in view between the IMF and EU officials over Athens’ ability to achieve a 3.5% primary surplus in 2018.
Tsipras’s government has rejected the demand out of hand describing it as both outlandish – the Greek economy has contracted by more than 25% since the debt crisis erupted in late 2010 – and unconstitutional.
On Wednesday Alexis Tsipras appeared to win support from the president of the EU commission, Jean-Claude Juncker, who according to the German MNI agency criticized the IMF which has taken a more hard line position in negotiations with the government in Athens, saying its role is undermining the eurozone. He also described the demand for extra measures as “unreasonable,” saying: “No parliament in the world would accept that.”
Source – The Guardian
