Greece aims to finalize new bailout terms this week
Greece laid out the hope Monday that intensive talks with international creditors over another financial lifeline for the country could be concluded this week, earlier than expected.
The discussions, which started late-July, have by all accounts made progress, though officials from the European Union were less optimistic than their counterparts in Athens about the likelihood of a deal being concluded this week. Germany, for one, has stressed the importance of being thorough in the complicated negotiations.
Hopes that a swift resolution will pave the way for the Greek parliament to ink the deal helped shore up Greek shares. The main index in Athens was up 1.6 percent in afternoon trading.
3 billion euros due next week
The Greek government needs the deal to be sorted out by Aug. 20 when the country has a debt repayment of a little more than 3 billion euros (the equivalent of $4.3 billion Canadian) to make to the European Central Bank. Greece won't be able to make that payment without funds emerging from the country's third bailout in just over five years.
Annika Breidthardt, European Commission spokeswoman on economics and financial affairs, said experts are "working day and night" to finalize the text of the formal agreement and an additional list of prior actions which the Greek authorities could legislate shortly.
"Progress has indeed been made and we expect further progress throughout the day and beyond as talks continue to resolve the remaining issues," she told a press briefing. "A deal ... can be reached in the month of August, preferably before the 20th of August."
Greece has relied on international bailouts worth a total 240 billion euros ($344 billion) since it lost market confidence and was unable to borrow from anyone else in 2010. To secure funds from the bailouts, successive governments have had to implement a series of spending cuts, tax hikes and reforms. While the austerity has reduced budget overspending, the measures compounded a deep recession and fuelled record high unemployment.
New austerity
Though the radical left-led government was elected on a staunchly anti-austerity platform in January, it has been forced into a policy U-turn after bailout talks came close to collapse last month.
While Greece's parliament ratified further tax hikes and reforms, a rebellion by hardline left-wingers has left Prime Minister Alexis Tsipras' Syriza party with only a nominal parliamentary majority and dependent on opposition backing to pass key creditor-demanded legislation. That has stoked talk that Tsipras will call early elections soon after the bailout deal is signed. Tsipras still retains strong personal support in opinion polls, which show Syriza heading for a potentially big victory.
A Greek government official said the hope is that a deal that "covers everything" will be concluded as soon as possible and indicated that one could be imminent by Friday, when he said a meeting of the eurozone's 19 finance ministers on Friday could take place.
The official, who was not authorized to speak on the record, said any talk of elections must follow the agreement, with whatever provisions it may contain on lightening the country's crushing debt load.
No official deal in place
No eurogroup meeting has been officially scheduled, and it remains unclear whether the ministers would hold a conference call or meet in Brussels should one take place.
In Berlin German government spokesman Steffen Seibert was cautious on the timing of the bailout deal.
"A swift conclusion of the negotiations would of course be desirable," he told reporters. "But we must not forget that this is about a three-year program ... so in this case particularly the sentence applies that `thoroughness comes before speed.'"
A senior lawmaker with Chancellor Angela Merkel's Christian Democrats raised the possibility of an interim agreement — strongly opposed by Athens — that would tide Greece over the ECB payment, while leaving time for more thorough negotiations on the overall deal.
"If there is no sustainable solution by Aug. 20 but we're on the right track in the negotiations, then there is still the possibility of further bridge financing," Ralph Brinkhaus told Deutschlandfunk radio. "That is always better than rushing into a bad agreement."