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Greek officials set for eurozone talks after night of protests in Athens IMF boss Lagarde rules out further Greece repayment delay
(about 9 hours later)
Greek negotiators head into talks with eurozone finance ministers on Thursday to tackle the debt-stricken country’s deepening crisis after demonstrations against further EU-enforced austerity took place in Athens last night. International Monetary Fund boss Christine Lagarde has ruled out any further delay to €1.6bn of loan repayments due from Greece by the end of the month, raising the pressure on Athens as eurozone finance ministers gathered in Luxembourg to discuss the growing crisis.
Despite warnings that Greece was heading for a possible exit from the euro without an extension of its current bailout deal, the meeting on Thursday is expected to be short, with little likely to be decided. Lagarde said there would be “no grace period or possibility of delay” to loan payments that are due on 30 June.
It follows a series of threats by the debt-stricken Greek government that it would be unable to pay without a deal with Brussels and the IMF to provide extra funds.
Lagarde said the leftist Syriza administration would need to concede over making further reforms to its pension system to get a deal, something prime minister Alexis Tsipras has refused to countenance.
Writing in German newspaper Der Tagesspiegel, Tsipras said pensioners had become the main breadwinners in many families, meaning cuts in pension payments would increase poverty.
Related: 'Making us poorer won't save Greece': how pension crisis is hurting its people
“The social security system is the institutionalised mechanism of intergenerational solidarity, and its sustainability is a main concern for society as a whole,” he said.
“Traditionally, this solidarity has meant that young people, through their contributions, fund the pensions of their parents. But during the Greek crisis, we’ve witnessed this solidarity being reversed as the parents’ pensions fund the survival of their children.”
But the IMF and Brussels want further cuts to bring down the cost of pensions, which account for 13% of GDP, with further restrictions on early retirement and lower supplementary pension payments.
Greek negotiators, who head into talks with eurozone finance ministers on Thursday, have ruled out cuts in pensions, saying there is a reform plan that reduces costs dramatically over the next 10 years.
The meeting is expected to be short, with little likely to be decided, despite warnings that Greece is heading for a possible exit from the euro without an extension of its current bailout deal.
The gathering of finance ministers from the currency bloc’s 19 member states is due to discuss the gulf between Athens and its creditors, but is expected to delay any decisions to a summit of EU leaders next week, officials in Brussels said.The gathering of finance ministers from the currency bloc’s 19 member states is due to discuss the gulf between Athens and its creditors, but is expected to delay any decisions to a summit of EU leaders next week, officials in Brussels said.
Related: Greece says it will run out of money by end of month without bailout dealRelated: Greece says it will run out of money by end of month without bailout deal
With no fresh proposals on the table, the ministers have indicated that there is little point in a prolonged debate about a potential deal at the meeting.With no fresh proposals on the table, the ministers have indicated that there is little point in a prolonged debate about a potential deal at the meeting.
The Greek government said it remained ready to join talks to secure an agreement, but could not accept the current proposals to cut pensions or achieve a 1% budget surplus in the middle of a recession.The Greek government said it remained ready to join talks to secure an agreement, but could not accept the current proposals to cut pensions or achieve a 1% budget surplus in the middle of a recession.
Financial markets are expected to greet the impasse between Greece and the troika of lenders – the European commission, the International Monetary Fund (IMF) and European Central Bank (ECB) – with dismay, further depressing prices that have slumped in recent days. Chief negotiator, Euclid Tsakalotos, warned on the BBC’s Today programme on Radio 4 this morning that “If Greece goes out, the euro might break down.”
A war of words between the Greek prime minister, Alexis Tsipras, and the troika has become further inflamed after he accused the IMF of “criminal responsibility” for the situation and said lenders were seeking to “humiliate” his country. He said: “Once one country has left, you change a monetary union into a fixed exchange rate system, where it’s a cost-benefit analysis whether another country leaves.
Jean-Claude Juncker, the president of the European commission, responded by saying he had “sympathy for the Greek people but not the Greek government”. Juncker was until recently rated as one of Tsipras’s only allies. “My greatest fear is that the break-up of the euro will return [us] to the competitive devaluations, and the nationalisms, and the kind of politics we had in the 1930s.”
Informal talks could take place over the weekend, ahead of the EU summit, after the ECB threw Athens a lifeline by raising the maximum emergency funding that Greek banks can obtain by €1.1bn (£790m). He added: “If we have don’t [have a deal], we have to go to the Greek people because we have no mandate to leave the euro, and that would be a very bad eventuality.”
The increase, which brought the overall ceiling on emergency liquidity assistance to €84.1bn, came after a stark warning from the Bank of Greece that the country could crash out of the eurozone unless it can conclude loan talks with its creditors by the end of the month. EU commissioner, Pierre Moscovici, who has voiced some sympathy for Athens, said: “Today is an important date and I have no desire to see us return to the age of Waterloo when the Europeans were all lined up against a single state.”
The Greek stock market has slumped 17% in a week after the country reached an impasse with its troika of lenders – the European commission, the International Monetary Fund (IMF) and European Central Bank (ECB).
A war of words between the Greek prime minister, Alexis Tsipras, and the troika has become further inflamed after he accused the IMF this week of “criminal responsibility” for the situation and said lenders were seeking to “humiliate” his country.
Jean-Claude Juncker, the president of the European commission, responded that he had “sympathy for the Greek people but not the Greek government”. Juncker was until recently viewed as one of Tsipras’s few allies.
Informal talks could take place over the weekend ahead of next week’s summit after the ECB threw Athens a lifeline by raising the maximum emergency funding that Greek banks can obtain by €1.1bn (£790m).
The increase, which brought the overall ceiling on emergency liquidity assistance to €84.1bn, came after a stark warning from the Bank of Greece that the country could crash out of the eurozone in an “uncontrollable crisis” unless it can conclude loan talks with its creditors by the end of the month.
Yannis Stournaras, the bank’s governor, used his annual report to the Greek parliament to warn that failure to reach a deal would “mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union”.Yannis Stournaras, the bank’s governor, used his annual report to the Greek parliament to warn that failure to reach a deal would “mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and – most likely – from the European Union”.
Stournaras, a finance minister in the previous rightwing and pro-bailout New Democracy administration, was roundly criticised by the government for undermining the negotiating position of elected officials.Stournaras, a finance minister in the previous rightwing and pro-bailout New Democracy administration, was roundly criticised by the government for undermining the negotiating position of elected officials.
Zoe Konstantopoulou, the president of the parliament, said the governor had not only breached his constitutional role but actively attempted to limit the room the government had for manoeuvre in its negotiations with creditors.Zoe Konstantopoulou, the president of the parliament, said the governor had not only breached his constitutional role but actively attempted to limit the room the government had for manoeuvre in its negotiations with creditors.
She said in a statement: “With his report today, the governor of the Bank of Greece not only exceeded the boundaries of his institutional role, he is attempting to contribute to the creation of an asphyxiating framework in the moves and negotiating abilities of the Greek government.”She said in a statement: “With his report today, the governor of the Bank of Greece not only exceeded the boundaries of his institutional role, he is attempting to contribute to the creation of an asphyxiating framework in the moves and negotiating abilities of the Greek government.”
The governor’s remarks came before Greece’s Syriza-led government confirmed it will run out of money by the end of the month unless its creditors agree to release €7.2bn in bailout funds.The governor’s remarks came before Greece’s Syriza-led government confirmed it will run out of money by the end of the month unless its creditors agree to release €7.2bn in bailout funds.
Euclid Tsakalotos, the lead negotiator, has conceded that the country does not have the funds to make a €1.6bn payment due to the IMF on 30 June. Tsakalotos has conceded that the country does not have the funds to make a €1.6bn payment due to the IMF on 30 June.
Athens delayed a payment to the IMF earlier this month, saying it would take advantage of a technical loophole allowing it to bundle three tranches due this month into the single €1.6bn sum. Athens delayed a payment to the IMF earlier this month, saying it would take advantage of a technical loophole allowing it to bundle four tranches due this month into the single €1.6bn sum.