Tuesday 12 November 2019

Greece bail-out deal 'very close'

Finance minister Yanis Varoufakis says a bail-out deal with Greece's creditors is very close
Finance minister Yanis Varoufakis says a bail-out deal with Greece's creditors is very close

Greece's finance minister has said he expects an agreement with bail-out creditors within the next week, which would save the country from fast-approaching bankruptcy.

"I think we are very close," Yanis Varoufakis said. "Let's say (it's a matter) of about a week."

For almost four months, Greece's radical left-led government has been haggling with its creditors from the 19-nation eurozone and International Monetary Fund over economic reforms it must make to secure a 7.2 billion euro (£5.2bn) cash injection.

That is the final payment due from the country's 240 billion-euro (£173bn) bail-out programme, launched five years ago after its public finances spiralled out of control and it was locked out of international bond markets.

In a late-night interview with private Star TV, Mr Varoufakis said creditors also appeared to believe that the time was ripe for a deal, but he insisted that he would reject any compromise that the radical government in Athens considered to be "non-viable".

Earlier, prime minister Alexis Tsipras said the country tabled detailed proposals for a viable deal, but warned Greece was in a state of "financial strangulation".

Over the past few weeks Greece has survived by scraping together cash from reserve accounts to pay debts as well as day-to-day commitments like wages and pensions.

However Athens admits it is running out of options as further debt repayments are due next month. If no deal is agreed, Mr Tsipras' government may be faced with a choice of what to pay, imposing capital controls or even leaving the euro.

"I assure you that if we face a dilemma between paying a creditor who refuses to sign an agreement with us and a pensioner, we will pay the pensioner," Mr Varoufakis said. "I hope we will be able to pay both."

Mr Tsipras also blamed Greece's creditors for the liquidity crunch.

"The lack of liquidity is neither the choice nor the responsibility of the Greek government," he said. "It is a tough negotiating tactic of our partners and I do not know whether everybody in Europe feels proud of it."

Government spokesman Gabriel Sakellaridis said to honor its debt obligations this summer, Greece needed more financial assistance. As a result, he expected a deal with creditors "by the end of May".

Markets appear to be uncertain about how the latest episode in the Greek debt crisis will pan out. Though uncertainty over Greece caused the interest rate on the government's two-year bonds - a gauge of default risk - surge about three percentage points to above 24%, the Athens Stock Exchange closed 1.6% higher.

In the talks, Athens is proposing reform measures that might protect Greeks hammered by a six-year recession, but lenders say the proposals are too vague.

Mr Varoufakis said the main sticking points include demanded pension and workplace reforms, as well as the height of the primary budget surplus - which excludes the cost of servicing Greece's huge debt - in coming years.

Government officials have suggested that Athens could seek popular approval for the final deal, through elections or a referendum. But Mr Varoufakis said he did not expect either and the agreement would be ratified in parliament.

He said it would be "foolish" to hold elections just months after the government came to power, adding that any referendum would effectively be a vote on whether to keep or lose the euro currency.

"And it would be unfair for Greek citizens to have to take a position on such a matter, answering with either a yes or a no," he said.

Athens has already pooled cash reserves from schools, hospitals and local government to fund the state's debt payments and Mr Sakellaridis confirmed that the government this month used a reserve account with money in a currency unit used by the IMF to repay a loan to the fund.

He also insisted Greece would not accept a one-off bank deposit levy to resolve the cash crisis - a similar measure had been used in eurozone member Cyprus two years ago.

The leaders of Germany and France said that talks on Greece's bailout need to accelerate and should produce an agreement by the end of May to keep the country from default on its debts.

German chancellor Angela Merkel and French president Francois Hollande said in Berlin that they were prepared to meet with Mr Tsipras this week on the sidelines of an EU summit in Riga to try to work through issues face-to-face.

Mr Hollande said "we need to speed things up - Greece has financial needs so financial resources need to be found".

Mrs Merkel added "we are all very interested that there be a programme by the end of May".

PA Media

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