Wednesday

22nd May 2019

Time running out for Greece, warns euro commissioner

  • Dombrovskis - 'time running out' for Greece. (Photo: European Parliament)

Time is running out for Greece to broker a compromise that will allow it unlock the remaining €7.2 billion in its EU-IMF bailout needed to avoid a default, the bloc’s eurozone commissioner has said.

In an interview with Bloomberg news on Monday (13 April), eurozone commissioner Valdis Dombrovskis said that technical negotiations between Greece and its creditors were “ongoing..and should go until the end of April” but added “time is running out”.

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Eurozone finance ministers will meet in Riga at the end of next week. Dombrovskis described the meeting as ”a preliminary date” where Greece must present economic reforms and its plans to implement the conditions of what remains of the bailout programme.

Despite managing to settle a €450 million repayment to the IMF last week, Alexis Tsipras’ government is facing an acute cash-flow crisis. Athens faces repayments totalling €2.4 billion this week, and a total of €16 billion over the next four months to redeem treasury bills and repay loans to the ECB and IMF.

The situation has prompted Greek officials to look at possible alternatives to the EU and IMF, but Tsipras came away from a meeting with Russian president Vladimir Putin last week without the prospect of a rival rescue plan.

“There is more time for negotiations but Greek authorities are emphasising that their cash flow position is getting very difficult,” said Dombrovskis, adding that “this should be a reason for the Greek side to accelerate talks.”

Tsipras government presented a revised economic plan to eurozone finance ministers last week that forecasts a growth rate of 1.4 percent in 2015 and a second successive budgetary surplus, a key demand of its creditors.

The 26-page document contains a raft of tax increases aimed at boosting treasury coffers by between €4.6 billion and €6.1 billion, alongside an extra €1.1 billion in spending commitments, most of which comes from increases to state pensions.

The government also promised that it would not default on its debt repayment obligations. However, the plans from Athens have yet to convince their creditors.

The continued impasse between Greece and its creditors, despite more than two months of negotiations since Tsipras’ Syriza party took power following elections in January, has prompted some European governments - such as the UK and Finland - to make contingency plans for a Greek exit from the currency bloc and increased the chances of an ‘accidental Grexit’.

Meanwhile a report in Tuesday's Financial Times suggested that Greek officials are preparing for a default if no deal on the bailout money is reached.

"We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default],” one government official told the newspaper.

Analysis

Greece: too much talk, not enough vision

Wild and often contradictory remarks, delays, and internal divisions make the new Greek government a difficult eurozone partner.

Greece risks default in mid-May, S&P warns

Greece will be forced to default on its debts if a deal with its EU creditors is not reached by mid-May, a leading credit rating agency has said.

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