By Renee Maltezou and Joseph Nasr
Greece’s talks with its official lenders on concluding a crucial bailout review have made progress, but more steps are needed to wrap it up, European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Wednesday.
Moscovici visited Athens to help bridge differences between Greece, Berlin and the International Monetary Fund over the country’s bailout targets, the possibility of further debt relief and efforts to speed up a review that has dragged on for months, rekindling fears of a new financial crisis in Europe.
“There is convergence at certain points so that we can conclude the review and move ahead,” Moscovici told reporters before a meeting with Greek Finance Minister Euclid Tsakalotos. “Some more small steps remain.”
Athens hopes for a “political” deal by Feb. 20, when the Eurogroup, the euro zone’s finance ministers, will discuss the Greek issue in Brussels.
Moscovici told Greek Prime Minister Alexis Tsipras that the Eurogroup meeting “could set the parameters of an agreement to conclude the review.”
“Some effort is required from all sides, with a little more effort we can achieve it, we must achieve it,” he said.
An initial agreement would allow the lenders’ mission chiefs to return to Athens and agree the reforms which Greece needs to adopt before its lenders sign off on the review.
The delays have revived memories of a standoff between Tsipras and the lenders in 2015 that almost forced Greece out of the euro zone. After months of tense talks, Tsipras signed up in July 2015 to a new bailout in return for austerity measures.
“We are going to discuss on and on until Monday … to bring everybody on board, so that everybody feels comfortable with the parameters of what could be a compromise,” said Moscovici adding that any agreement would need to include the IMF.
ACCUSATIONS
The EU says Athens can out-perform its target of a primary surplus – which excludes debt servicing costs – of 3.5 percent of gross domestic product in 2018, when its bailout plan ends.
The IMF, which has yet to decide if it will fund the Greek programme, says the mix of measures in the bailout can only yield a surplus of 1.5 percent of GDP in 2018 unless Athens adopts more austerity and is granted significant debt relief.
EU officials have called IMF projections “pessimistic”. Germany, Europe’s paymaster, says Greece does not need further debt relief but does need more reforms to improve its competitiveness.
Berlin wants the IMF to join the programme, as it gears for national elections. It believes the fund can add credibility to the Greek bailout, the country’s third rescue plan since 2010.
But Poul Thomsen, director of the IMF’s European department, told German newspaper Handelsblatt that the IMF’s view on the Greek economy had not changed.
“Accusations that we have outdated models and that we are permanently too pessimistic, goes against the fact that the Greek program has missed targets for years now,” Thomsen said.
Tsakalotos urged the IMF to make a decision on its participation on Wednesday.
“If the IMF wants to cooperate, it should make a quick decision and stop making unreasonable demands,” he wrote in an opinion piece in the German newspaper Bild.
Tsipras told Moscovici that it would be destructive to discuss more austerity measures and that an “alliance of logic” was needed to wrap up the review. Greece has cut pensions 11 times since the debt crisis broke out.
With national elections looming across Europe, time is shrinking for Athens and its lenders to cobble together a deal that will stave off a Greek default on loan repayments in July.
Greece’s annual EU-harmonised inflation rate picked up in January, data showed on Wednesday, reaching its highest in almost five years.
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