BRUSSELS – With its next financial deadline looming, Greece is struggling to convince its creditors it has a viable economic reform plan to unlock emergency funds and prevent the country from going bankrupt.
Without outside help, Greece faces the prospect of going bankrupt in the next few months. A deal with creditors will secure the recently agreed four-month extension to the country’s bailout program to July.
EU Commission spokesman Margaritis Schinas said Monday that a deal on comprehensive reforms still “requires a lot of technical work” even after hours of work over the weekend. An agreement should unlock Greece’s next funds — around 7 billion euros — that are due from the bailout.
Athens has relied on bailout funds for nearly five years. In return, successive Greek governments have had to impose tough austerity measures, such as big cuts to spending and pensions.
Opposition to the austerity, which many blame for a recession that saw Greek economic output shrink by a quarter and unemployment and poverty levels to swell dramatically, was largely behind the election of Greek Prime Minister Alexis Tsipras and his left-wing Syriza party in elections in January.
In an acknowledgement to the changing Greek political situation, Tsipras has been allowed to craft his own reform measures but only if the net budget effect is the same as that outlined in Greece’s current bailout prescription.
Time is of the essence.
Athens faces debt repayments and rollovers of nearly 3 billion euros ($3.3 billion) in April, mainly in the middle of the month. That sum will rise in July. Not being able to raise money on international bond markets, Greece depends on bailout creditors for the money to meet those obligations.
Germany, the biggest individual creditor to Greece’s bailouts, insists a lot more still needed to be done. Finance Ministry spokesman Martin Jaeger said the talks were “to be honest a little hard to evaluate — clearly not an officially submitted comprehensive reform list.”
The Commission’s Schinas appeared a bit more optimistic, saying the continuation of the discussions “is a positive sign that shows willingness and seriousness of all sides to constructively engage.”
So far, Greece says reworked reforms for 2015 would yield 3 billion euros from measures that would not depress economic activity in Greece — cuts to salaries and pensions are out.
An official in Athens said last week that the reforms had been cost-assessed and would still leave Greece with a primary budget surplus — what’s left after debt payments — of 1.5 per cent of GDP in 2015 and growth of around 1.4 per cent.
Prime Minister Alexis Tsipras is due to brief parliament on the negotiations in parliament late Monday.
Elena Becatoros in Athens and Geir Moulson in Berlin contributed to this article.
Follow Raf Casert at http://twitter.com/rcasert