No Greece bailout deal yet
BRUSSELS – Crucial talks between Greece and its creditors to keep the country solvent and within the euro got bogged down again Wednesday amid differences over what kind of reforms the country should make in exchange for loans.
The impasse forced eurozone finance ministers to cut short a meeting, which they plan to resume today. Concern over the lack of progress weighed on financial markets, with stock indexes falling in the U.S., where trading was still open.
Earlier in the day, Greek Prime Minister Alexis Tsipras held long talks with key creditors but bickered again over what kind of reforms the country should make in return for much-needed loans.
Greece has promised mainly tax increases to achieve budget savings, whereas the International Monetary Fund would like more spending cuts. Tsipras rejected the creditors’ new suggestions, saying they put both sides further away from a deal.
“The Greek side is unable to agree on such a course,” a Greek government official said after Tsipras assessed the proposals, which included fresh cuts in public sector payrolls and a timetable to scrap a pension safety net fund.
“These are very tough negotiations,” the Greek official said. “But there is a common will to get somewhere.” The official spoke only on condition of anonymity because the talks were ongoing.
Wednesday’s finance ministers’ meeting was meant to iron out the details on the reforms in time for EU leaders to approve them at a summit they will hold today. Now they will meet again only hours before the summit.
After the finance ministers broke up their meeting, Tsipras again went into meetings with European and IMF top officials.
Greece has a $1.8 billion debt to pay on Tuesday which it cannot afford unless the creditors unfreeze $8.1 billion dollars in bailout money.
A Greek exit from the euro would be hugely painful for the country. Some experts say it could be manageable for Europe and the world economy, but that remains unclear.
The latest disagreement weighed on the Athens Stock Exchange, which earlier closed down 1.8 percent after big gains the previous two days. Government bond yields in Greece, Spain and Portugal rose, an indication of investor concern.
Elected on an anti-bail-out platform in January, Tsipras’ left-wing Syriza party had promised to scrap all austerity measures and demand forgiveness on a chunk of the country’s bailout debt. Tsipras has had to backtrack partly on those pledges and now could have trouble persuading party lawmakers to back a new deal, which would have to be approved by Monday night.
Athens was forced into concessions by a punishing debt repayment schedule and an economy hammered by uncertainty: A return to mild recession, ratings downgrades and dramatic outflow of bank deposits that threatened to crash the country’s financial system.