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Lenders and Greece 'wide apart' on bailout review: euro zone official
March 16, 2017 / 3:27 PM / 7 months ago

Lenders and Greece 'wide apart' on bailout review: euro zone official

BRUSSELS/ATHENS (Reuters) - Greece and its international creditors remain divided over the terms of a review of the country’s bailout program, a senior euro zone official said on Thursday, a gap that will prevent Athens from getting fresh financial support.

Workers are seen atop a building next to a Greece flag in Syntagma square in Athens March 10, 2015. REUTERS/Yannis Behrakis

Under an 86 billion-euro ($92 billion) bailout program, the third since 2010, Greece is seeking new loans from euro zone countries to avoid defaulting on about 7.5 billion euros of debt falling due by July. Creditors demand in exchange that Athens carry out several reforms.

“The institutions and the Greek authorities are still quite wide apart on a number of issues,” the official said, noting that Greece had not made sufficient progress on its fiscal targets, on pensions and labor reforms and on privatizations and the electricity market.

The lack of enough progress at the technical level means that euro zone finance ministers who gather on Monday in Brussels for a regular monthly meeting are unlikely to reach a political compromise on a new loan to Greece, an outcome that would increase concerns over the country’s financial stability.

But Greek Finance Minister Euclid Tsakalotos said in Athens on Thursday he was confident a preliminary deal could be reached next week, which would pave the way for a comprehensive agreement by April 7, including debt relief commitments from the lenders.

The euro zone senior official from Brussels was less optimist. Talks continue and may extend into the weekend, but chances of a technical deal on Monday are slim, the official said, raising the prospect of a further extension of the negotiations until May.

The Eurogroup of euro zone finance ministers will meet again in Malta on April 7, but the official saw little hope that a compromise could be reached by then.

Without a deal in the first week of April, the next date for a political agreement would be May 22, when a regular Eurogroup meeting is already scheduled. Talks on these new loans have been dragging on since February.

An agreement on reforms is considered a precondition for negotiators to discuss a possible participation of the International Monetary Fund to the bailout.

Germany, which holds elections in September, wants the IMF on board before new money is lent to Athens. But it disagrees with the IMF over debt relief and the fiscal targets that Greece should maintain after the bailout program ends in 2018.

Additional reporting by Michele Kambas; editing by Robin Emmott

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