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Friday 30 September 2016

Greece and its global lenders in final push to seal bailout deal

Lefteris Papadimas

Published 11/08/2015 | 02:30

German demands reflect Eurozone uncertainty over whether Greece will honour commitments
German demands reflect Eurozone uncertainty over whether Greece will honour commitments

Greece and international creditors sought to put final touches to a multi-billion euro bailout deal yesterday to keep the country financially afloat and meet an important debt repayment to the European Central Bank (ECB) within weeks.

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Germany set out "strict" conditions for further aid and said it would be sensible to link the size of the first tranche to Greece's progress in carrying out reforms, a reflection of worry around the Eurozone that Athens might not do as promised.

Greek ministers and representatives of European institutions and the International Monetary Fund (IMF) resumed talks yesterday morning after a marathon Sunday session that ended in the pre-dawn hours.

A deal for up to €86bn in fresh loans to the debt-stricken nation must be in place by August 20, when the repayment to the ECB is due.

Greek bond yields fell as hopes grew of a speedy end to talks.

An agreement would mark the end of a painful chapter on bailout talks for Greece, which fought against austerity terms demanded by creditors for much of the year before accepting a deal under the threat of being bounced out of the single currency.

"From 12 midnight, the two sides started the final stretch, discussing the final stretch - combing through the final text, sentence by sentence, word by word," a Greek finance ministry official said.

Greek officials had earlier said they hoped to conclude negotiations with creditors by early today at the latest. The European Commission said it anticipated a deal this month.

"A deal is feasible. A deal can be reached in the month of August, preferably before August 20," European Commission spokeswoman Annika Breidthardt said.

Greek banks could get an initial capital injection soon after a bailout deal is clinched, as much as €10bn, even before the ECB completes a stress test, a Eurozone official familiar with the issue said yesterday.

The official said a test may not be finished before October but that it was recognised the Greek banks need urgent capital to normalise their operations.

Germany yesterday stressed its wish for "quality before speed" in the negotiations, threatening to slow down the process as it pressed for strict conditions to be linked to aid.

Popular misgivings run deep in Germany, the Eurozone country that has already contributed most to Greece's two bailouts since 2010, about funnelling yet more money to Athens.

Germany wants a deal that includes an ambitious budget plan, a credible privatisation strategy and a sustainable pension reform by Greece, a German Finance Ministry spokesman said.

"It is sensible - that is our belief - to fix the size of the first payment tranche to the extent of the reforms implemented," he said. "That means strict conditionality for financial help."

Mr Weissgerber said Germany was not involved in the negotiations and would need time after any deal to review the results.

Greek officials have said they expect the bailout deal to be approved by Greece's parliament tomorrow or Thursday and then vetted by the Eurogroup - finance ministers of the Eurozone - on Friday, paving the way for aid disbursements.

The bailout pact will be voted on in parliament as one bill with two articles - one on the loan agreement and memorandum of understanding and the second on the so-called prior actions that must be completed for aid to be released, another Greek official said. (Reuters)

Irish Independent

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