Greece battles to avert default debacle in EU-IMF talks

GMT 19:03 2015 Monday ,15 June

Arab Today, arab today Greece battles to avert default debacle in EU-IMF talks

A demonstrator holds up a a flare as students participate
Athens - AFP

Greece tried Monday to drag loan talks with its EU-IMF creditors back from the brink after negotiations collapsed over the weekend and left the country just two weeks away from a catastrophic default on its debt.

Hours after radical-left Prime Minister Alexis Tsipras defiantly called on the creditors to be "more realistic," Athens said it was ready to return to the talks "at any time."

"We await the invitation of the (creditors) and will respond at any time to continue the negotiation," Tsipras' office said.

Tsipras's government has been locked in negotiations with Greece's creditors -- the European Union and the International Monetary Fund for five months, in the hopes of securing the release of the remaining 7.2 billion euros in rescue funds.
But frustration has mounted on both sides, with Athens refusing to sign on to what it described as "irrational" economic reforms demanded by its creditors.

Tsipras on Monday lambasted the creditors for "political opportunism" in trying to force Athens to further streamline its pension system, a concession the leftist anti-austerity government has steadfastly refused to make.

- 'Don't waste time' -

"One can only see a political purposefulness in the insistence of creditors on new cuts in pensions after five years of looting under the bailouts," Tsipras told Greek newspaper Efimerida Ton Syntakton.
But an EU spokeswoman said the EU and IMF have already made "major concessions" to Greece. "It's not a one-way street," Annika Breidthardt  told a press conference.

She added: "The concessions ... made and the flexibility that has been shown are already quite substantial."

In Frankfurt, European Central Bank chief Mario Draghi urged all sides "to go the extra mile" but insisted the ball was in Athens' court.

"A strong and credible agreement with Greece is needed, not only in the interest of Greece, but also of the euro area as a whole," Draghi told the European Parliament's Committee on Economic and Monetary Affairs in Brussels.
"While all actors will now need to go the extra mile, the ball lies squarely in the camp of the Greek government to take the necessary steps," he said.

French President Francois Hollande likewise urged Greece to "not waste time."

"This message is for Greece," Hollande told reporters at the Paris Air Show. "It should not wait and should restart discussions with the institutions... Let's not waste time."

The Athens Stock Exchange plunged 7.14 percent in early trade Monday before closing with a 4.68 percent drop, with bank stocks especially hard hit.

Draghi however gave the assurance that the banks were currently solvent and that the ECB will continue to provide liquidity to them to help finance the economy.
Greece's 240 billion euro bailout expires on June 30, and to meet that deadline, a reform deal must be resolved by a meeting in Luxembourg on Thursday of the eurozone's 19 finance ministers, who control the purse strings of the rescue programme.

Also at the end of the month, Greece faces a 1.6 billion-euro payment to the IMF with another 6.7 billion euros due to the European Central Bank in July and August, which Greek officials have said the government cannot afford.

- Growth forecast slashed -

Valdis Dombrovskis, the EU's vice president responsible for the euro, said Monday that in view of the "persistent uncertainty", the EU had slashed its projection of Greece's GDP growth for 2015 from 2.5 percent to 0.5 percent.
Speaking at the start of Innovative Enterprise Week in Riga, he said: "Needless to say, all projections for Greece are subject to a particularly high degree of uncertainty since... the agreement is still not reached."

All sides had agreed that the talks were the last chance for Athens to unlock vital bailout cash in return for tough reforms that Tsipras still doggedly refuses.

But Greece said the IMF was particularly hardline on its demands.

The Fund's position was "intransigent and tough" because it was insisting on further pension cuts and a rise in value-added tax on basic goods, like electricity, an Athens source added.

But in a rare statement on their position in the talks, the IMF took a conciliatory approach, writing in an official blog that a deal would require "difficult decisions by all sides" -- including Greece's European partners.

Greece is shattered economically after six years of crisis and despite two rescue programmes since 2010.

Its debt mountain is equivalent to 180 percent of GDP, or almost twice the country's annual economic output.

According to an EU source, savings from the reform measures put on the table by Greece fell short by two billion euros.


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