Greece and its international lenders are close to a deal on a package of bailout reforms and are working to agree further contingency steps by May 9 when an extraordinary meeting of euro zone finance ministers will be held in Brussels, EU officials said on Thursday.
Talks between Greece and its lenders have almost reached a conclusion on reforms agreed within the current bailout program, while more negotiations are needed on further contingency measures that Athens must commit to in exchange for debt relief negotiations.
“We are 99 percent of the way there, we have converged on almost all aspects,” European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Thursday on the original reform package, which includes a pension and income tax reform, a way to deal with bad loans and setting up a privatization fund.
“As for the contingency mechanism, which in our view is not really justified by data but politically necessary, let’s work on that,” he added.
The work is expected to be concluded by May 9 when euro zone finance ministers will hold an extraordinary meeting to discuss progress on Greece.
There will be an “additional eurogroup on Greece on Monday 9 May at 3 p.m. in Brussels,” the spokesman of euro zone finance ministers’ chairman Jeroen Dijsselbloem said late on Thursday in a tweet.
Euro zone finance ministers had been due to meet on Thursday to sign off on the deal with Athens and discuss Greek debt relief, but the meeting was canceled because of insufficient progress.
The main sticking point is on the contingency measures that euro zone finance ministers requested last week, in addition to the reform package already agreed with Athens.
The original reform set is to generate 3 percent of GDP savings for Greece.
But because of a difference in forecasts of Greece’s primary surplus in 2018 between euro zone lenders and the International Monetary Fund, euro zone ministers asked Greece last Friday to prepare a set of contingency steps to be implemented only if Athens misses targets.
The contingency package which is to provide 2 percent of GDP savings – the difference between the IMF and euro zone forecasts – has to be legislated up-front and kick in automatically if Greece does not meet targets.
Greece argues that its laws do not allow it to pass contingency laws and offered to legislate an automatic mechanism for across-the-board spending cuts if it falls short of goals.
“This deserves to be looked at, given due consideration,” Moscovici said.
“We have a few proposals on the table, which go in that direction, but we need to work on that,” he said, adding that the mechanism of contingency steps had to be compatible with Greek laws.