Greece debt repayment uncertain amid fresh round of talks
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Version 0 of 1. Greece and the eurozone face a week of fresh nail-biting uncertainty as the single currency area’s finance ministers prepare to report on progress towards an agreement with Alexis Tsipras’s government. On Tuesday, Greece faces having to repay around €770m (£560m) to the International Monetary Fund (IMF). The two events had been widely linked. It was assumed that the cash-strapped Athens government would be unable to meet its obligations to the IMF without a cash-for-reforms deal with its creditors that would release more than €7bn. Related: Eurozone pins hope on long-awaited economic rebound But last Wednesday Greece managed to scrape together €200m for an earlier instalment to the IMF. And the finance minister, Yanis Varoufakis, said it could avoid default this week, apparently regardless of whether there was an agreement. In a desperate attempt to raise funds, the government last month told local and regional authorities and public bodies to hand over their spare cash to the central bank. But some have defied the order and the government has reportedly struggled to reach its target figure of €2.5bn. Varoufakis was speaking on a tour of European capitals, part of a wider diplomatic initiative to win understanding for his government’s increasingly fraught position in advance of Monday’s meeting of the finance ministers. The deputy prime minister, Yannis Dragasakis, saw the head of the European Central Bank (ECB), Mario Draghi. Tsipras, meanwhile, telephoned the French president, François Hollande, and spoke more than once to the head of the European commission, Jean-Claude Juncker. He also talked to the Russian president, Vladimir Putin, in what appeared to be a reminder to the rest of the EU that he had other options in the event of Greece being forced out of the euro. The Kremlin said Putin had confirmed Moscow would supply financing to Greek firms involved in a gas pipeline project. The talks between Athens and its creditors have centred on the readiness of the Tsipras government – a coalition of radical leftwingers and populist rightwingers – to liberalise the economy. The Greek side has reportedly made concessions on harmonising VAT rates, improving tax collection and rebooting the country’s stalled programme of privatisations. But Tsipras and his ministers have drawn a red line in front of pension cuts and labour market deregulation (though the prime minister last week indicated that he was ready to discuss both issues). He has talked up the prospects for agreement, telling parliament at the end of last week that he expected a deal soon. That is clearly not the perception of Greece’s creditors in the IMF, the ECB and other eurozone nations, represented in the talks by the European commission. Jeroen Dijsselbloem, the Dutch finance minister who will chair Monday’s meeting, said last week: “Lots of issues have to be solved, have to be deepened more, with more details.” Austria’s finance minister, Hans Jörg Schelling, told Reuters the negotiators did “not have anything close to a sensible solution”. Against this ambiguous background, the exact tone of any statement released after the meeting will be crucial. Anything less than upbeat would redouble the pressure on the ECB to tighten its emergency lending to Greece’s commercial banks. The banks provide collateral through a variety of assets, including government bonds. But, in view of Greece’s economic plight and the uncertain value of the banks’ assets, the ECB discounts the value of the collateral they put up by around 40%. Wolfango Piccoli, of the political risk consultancy Teneo, said to ratchet up the pressure on the Greek negotiating team, the ECB could increase the discount. “Then, either the banks would have to find more collateral or the ECB would lend them less money. That is certainly a risk that is looming. It would make the life of the banks very, very difficult if it went ahead.” |