Greece pays €200m to IMF but prospect of imminent debt deal fades

in Brussels Greece made a €200 million interest repayment to the IMF

yesterday, but hopes of a deal before Monday’s finance ministers’ meeting in Brussels were dampened after eurogroup president Jeroen Dijsselbloem said there would be “no agreements on Monday”.

Monday is the day before a €750 million payment is due to the Washington-based IMF.

“Since the last eurogroup quite a bit of progress has been made,” Mr Dijsselbloem said in Paris.

“I’m getting some positive reports from the talks in Brussels. Still, lots of issues have to be solved, have to been deepened more, with more details, so there will be no agreements on Monday. We have to be realistic.”

The focus of negotiations in Brussels on a revised Greek programme continued to be on labour market reforms and pensions, according to officials, with Greece facing pressure to compromise on one or more of these areas.

This is despite the fact that the Greek parliament approved a law late on Tuesday paving the way for the rehiring of more than 13,000 public sector workers who lost their jobs under the terms of the Greek bailout.

Deadlocked

More than three months after a Syriza-led government assumed power in Athens, Greece and its international lenders remain deadlocked in negotiations on a revised agreement to unlock €7.2 billion due to Greece under the terms of its existing bailout.

In a joint statement issued after a phonecall yesterday, European Commission president Jean-Claude Juncker and Greek prime minister Alexis Tsipras said they had discussed the importance of “reforms to modernise the pension system so that it is fair, fiscally sustainable and effective in averting old-age poverty”, as well as the need for an effective collective bargaining system on wages.

In an apparent attempt to portray a united front following reports of divisions between the IMF, the European Central Bank (ECB) and the European Commission on the next steps for Greece, the three issued a joint statement yesterday expressing their commitment to the “same objective of helping Greece achieve financial stability and growth”.

“All three institutions are working hard to achieve concrete progress on May 11th,” the statement said.

Emergency liquidity

Meanwhile, the ECB was not expected to tighten the rules on extending emergency liquidity to Greek banks at yesterday’s Governing Council meeting.

The Greek government has been pressing the ECB to increase the limit on the amount of short-term T-bills the bank will accept in return for emergency funding.

The ECB has been propping up Greek banks with billions of euro of emergency liquidity assistance as deposits have left Greek banks.

The ECB’s weekly assessment of the bank’s liquidity provisions to Greece yesterday took place a day after Greek deputy prime minister Yannis Dragasakis met ECB president Mario Draghi in Frankfurt. Yesterday, Mr Dragasakis, who assumed responsibility for the Greek bailout negotiations after finance minister Yanis Varoufakis was sidelined from the negotiations last week, was forced to deny Greek media reports that he was unaware of a non-paper issued by the government which suggested that tensions between the IMF and the EU lenders were obstructing progress on Greece ahead of his meeting with Mr Draghi.

Separately, Germany’s finance minister Wolfgang Schaüble said yesterday it was in Germany’s interest to help Greece, although he added Greece should not blame international creditors for its problems. He added Greek demands for second World War reparations were “nonsense”.