Key issues separate Greece and creditors

Financial noose tightens with €200m payment due on Wednesday

Graffiti covers the shopping windows of closed shops, as a pedestrian walks past, in Athens, Greece. Euro-area officials were sceptical that a technical agreement would be reached by Wednesday.  Photograph: Kostas Tsironis/Bloomberg

Graffiti covers the shopping windows of closed shops, as a pedestrian walks past, in Athens, Greece. Euro-area officials were sceptical that a technical agreement would be reached by Wednesday. Photograph: Kostas Tsironis/Bloomberg

 

Talks between Greece and its international creditors gained urgency as the two sides remained apart on key elements of the country’s bailout agenda after four days of intensive negotiations.

While progress has been made and the atmosphere improved, differences were still significant on issues from fiscal assumptions to asset sales and labour and pension reforms, three people familiar with the negotiations said yesterday.

As talks stretched into this week, euro-area officials were sceptical that a technical agreement would be reached by Wednesday, when the European Central Bank meets to discuss emergency funding for Greek banks, two of the sources said.

The financial noose is tightening on Greece, which is due to pay about €200 million to the International Monetary Fund on Wednesday and another €770 million on May 12th.

Greek prime minister Alexis Tsipras has said he is aiming for enough progress in technical talks in Brussels and Athens to allow the ECB to relax liquidity conditions and avert a default as early as this month, Greek newspaper Kathimerini reported yesterday.

“It’s clear that we need an interim agreement as soon as possible to unclog the situation,” a Greek government spokesman said. “The continuation of this uncertainty benefits neither Greece nor Europe. ”

The ECB governing council may discuss whether to increase discounts on the collateral it accepts from Greek banks in return for emergency funding, a move that could further restrict access to liquidity.

The stance of the governing council will depend on the progress achieved in the talks in the meantime, one of the sources said, adding that restrictions on Greek banks could be eased only once it is clear that bailout funding would resume.

Mr Tsipras told his cabinet on Thursday he was confident of closing a deal ahead of a meeting of euro-area finance ministers on May 11th, even as his government sent conflicting signals on its willingness to agree on reforms required under the €240-billion bailout.

Eurogroup president Jeroen Dijsselbloem said it was too early to say whether talks with Greece had reached a turning point. – (Bloomberg)