Creditors and gov’t aim to seal agreement by Easter but obstacles remain

9 April 2016
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Although the Finance Ministry insisted Friday that the draft of the agreement with the country’s creditors will be ready by Tuesday and signed by Easter, the result of Thursday’s Euro Working Group (EWG) suggested that there are still many obstacles to overcome, including pensions, the framework for the sale of nonperforming loans and the measures needed to close the fiscal gap by 2018.

“Negotiations for the first review will soon be completed as it is the common will of all sides for a deal,” Finance Ministry sources said Friday as Greece aims to wrap up the first review of its third bailout by Easter so that it can unlock a tranche of financial assistance and start discussions on debt relief on the sidelines of the April 15-17 International Monetary Fund conference in Washington.

“If there is no agreement, then the discussion about debt relief cannot start,” an official of the country’s quartet of creditors told Kathimerini Friday.

But an agreement still remains elusive as the European Commission and the IMF have also drawn up their own drafts with differences on crucial issues.

The Commission’s draft estimates that measures equivalent to 3 percent of gross domestic product would yield a 3.5 percent primary surplus in 2018 while the IMF contends that the measures would yield 2.5 percent of GDP, leading to a 1.5 percent primary surplus in 2018.

Disagreements also remain over the thorny issue of pensions.

IMF chief Christine Lagarde reiterated Friday that Greece must take tough decisions as “the pension scheme is going right into the wall the way it is now, and they know it.”

However while Lagarde said it was imperative for Greece to implement reforms, she also insisted that Europe must compromise on debt relief.

The IMF has repeatedly stated that its participation in Greece’s third bailout will depend on Athens implementing “real reforms, including pensions, and a sustainable debt, otherwise the numbers simply won’t add up.”

“I have repeatedly said we need a program for that country that adds up, that reaches the objective of restoring economic stability and where debt is sustainable in the long run and those three parameters are still there, as alive as ever,” Lagarde said.

Although work has been done by the Greek government and there has been progress, she told Euronews earlier Friday, a lot more work needs to be done.

An official representing Greece’s creditors told Kathimerini that that now the differences between both sides have been ascertained, “the review can be wrapped up as long as Athens has the political will.”

Representatives of Greece’s quartet of creditors are expected to return to Athens Saturday after flying to Brussels Friday.

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