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Greece Close to Debt Deal
World Economy

Greece Close to Debt Deal

Greece is “very close” to a debt relief deal, the EU’s economics chief has said, adding to hopes that the embattled economy can avoid another round of tense talks and uncertainty this summer.
Pierre Moscovici, the European economic affairs commissioner, said that Greece and its creditors were “approaching a crucial moment in these discussions and I am confident and hopeful that we can reach a positive conclusion because it is simply in everyone’s interest to do so”, Bloomberg reported.
Speaking at a G7 finance meeting in Japan, where talk of Greece’s debt woes has become a frequent topic of discussion on the sidelines, Moscovici said that negotiators were “very close, very, very close” to a successful deal.
Jeroen Dijsselbloem, the head of the Eurogroup, said on Friday that he had hopes for a Greek deal within the week. “We’re in a completely different situation than we were a year ago,” he told Bloomberg, referring to the fraught late night arguments between Greece’s socialist politicians and the country’s creditors.
Dijsselbloem said: “Hopefully next Tuesday in the next Eurogroup meeting we’ll get that deal that I think Greece needs and deserves.”
Athens’ leaders are under pressure to arrive at an agreement, as the government faces large repayments to two of its creditors this July. One of those lenders, the International Monetary Fund, has recommended that Greece  not pay a single cent of the debt it owes its European lenders until 2040.
The IMF has refused to provide further financial support unless debt relief can be agreed. The fund is one of Greece’s three principal creditors, alongside the EU and the European Central Bank. Without any relief, the IMF said that it expects Greece’s government debts to rise to 293.8% of annual economic output by 2060.
However, opposition to debt relief, primarily from German interests, could block progress in easing Greece’s burden. Berlin has argued that Athens should receive no relief until 2018, and only after it has met the terms of its third EU bail-out.
Analysts at Citibank said that they doubted the ability of European creditors to “agree on a meaningful long-term debt relief package at the Eurogroup meeting next week”. While they suggested that there could be some short-term measures to ease the debt burden, they said that the most Athens could hope for might be lower interest rates on its loans.
The Wall Street bank added that “this may mean the IMF will still not participate financially in the third bail-out”.

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