World Economy

Eurozone Struggles to Forge Greece Bailout Deal

Heavily-indebted Athens and its EU and IMF creditors have been deadlocked over reforms since October.Heavily-indebted Athens and its EU and IMF creditors have been deadlocked over reforms since October.

Eurozone finance ministers raced to reach a reform deal with Greece on Friday in an effort to release billions in bailout cash and avert further damage to a stalling Greek economy.

Eurogroup head Jeroen Dijsselbloem spent the week shuttling between Brussels and Berlin ahead of Friday’s ministerial talks in hopes of finding compromise in a fight that has dragged on for months.

“We’re not there yet,” a eurozone official close to the talks told AFP before the ministers from the 19 countries that use the single currency met in Valletta, the capital of Malta which holds the EU’s six-month rotating presidency.

The impasse has held up the latest installment of Greece’s €86 billion ($92 billion) bailout, agreed in 2015.

Heavily-indebted Athens and its EU and IMF creditors have been deadlocked over reforms since October amid disagreements on debt relief and budget targets for Greece. The deal is needed in order to stop the country from defaulting on its creditors this summer when Athens owes about €7 billion in debt repayments.

“We are in the final meters of this difficult road”, Greek Prime Minister Alexis Tsipras said on Thursday in central Greece as he opened a new road tunnel. “We are determined... not to let anyone play games against the Greek economy,” he added.

Without a deal this week, Tsipras said he would ask for a eurozone leaders summit later this month, making his case in a phone call to German Chancellor Angela Merkel, Europe’s most powerful leader.

Talks have stalled on a refusal by Athens to accept any reform commitments beyond the term of its current bailout that is due to end in 2018.

But media reports said the Greek government was now prepared to accept to reduce pensions in 2019 and increase taxes in 2020. “There has been progress in discussions, but important issues remain outstanding,” IMF spokesman Gerry Rice told reporters in Washington.

 Economy Hit

Recent data has showed that the Greek economy, which had cautiously stabilized in recent months, was beginning to falter due to rising uncertainty triggered by the row. “The negative economic consequences for Greece are adding up,” a source close to the negotiations told AFP.

Despite projections for growth, the Greek economy stalled in 2016, with forecasts now showing further deterioration to the economy.

Also pressing matters is a desire by eurozone ministers to present a united front to the IMF later this month at the fund’s annual meetings in Washington.

The Europeans have been at loggerheads with the International Monetary Fund over the Washington-based lender’s demands for more realistic budget targets and for firm commitments to reduce Greece’s mountain of debt.

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