No crisis on Greece bailout deal, says euro zone finance chief

Greece and its EU creditors were locked in emergency talks on Friday evening, after the head of the euro zone dismissed suggestions that the country's bailout programme was in crisis.

Jeroen Dijsselbloem, the Dutch finance minister and president of the euro group of finance ministers, called a surprise meeting with other key players in Brussels on Friday afternoon, as Greece and its EU creditors sought to hammer out an agreement on the next stage of the country's €86 billion bailout.

Euclid Tsakalotos, Greece's finance minister, flew in from Athens, according to Greek media reported by Reuters. Pierre Moscovici, EU commissioner for economic affairs, Klaus Regling, head of the European Stability Mechanism, and Benoit Coeuré from the European Central Bank were also reported to be taking part in the meeting.

Greece needs to agree economic reforms with its EU partners in order to unlock the next tranche of bailout funds before debt repayments due in the summer. A meeting of euro zone finance ministers on February 20th is widely seen as the last chance to reach a deal before critical elections in the Netherlands, France and Germany this year.

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Dijsselbloem dismissed the idea that the bailout programme was in crisis. “The story that there’s a crisis [is] roundly exaggerated,” he said on Friday in The Hague. “The next large payment that Greece needs to make [on its debt] isn’t until this summer. But if I can give them a push today, that would be very welcome.”

Costs spiked

Greek borrowing costs have spiked in recent weeks amid investor fears that Athens will struggle to unlock the next tranche of its bailout funds because of a dispute between its EU creditors and the

International Monetary Fund

.

The IMF has declined to join the latest Greek bailout programme: it argues that without debt relief, the Greek economy will struggle for decades to come. The EU thinks short-term debt-relief measures already on the table make Greece’s debt burden manageable.

But several countries, including Germany and the Netherlands, want the IMF on board because they think its participation will ensure Greek reforms are pursued rigorously, while also reassuring sceptical voters.

Dijsselbloem said the talks would not be about debt relief. He wants to focus on pension reforms and the primary surplus – defined as government income exceeding spending, excluding debt repayments.

The EU wants Greece to hit a surplus on its budget of 3.5 per cent of GDP by 2018, but the IMF and the Greek government argue this is unachieveable and want a lower, 1.5 per cent target.

Greek ministers have sounded optimistic about breaking the deadlock: the Europe minister, George Katrougalos, said a deal before February 20th was possible and could have been struck earlier if the IMF had not been involved.

- Guardian News and Media 2017