Friday, 29 May 2015

Greece won’t get rest of bailout unless deal outline ready by June 5

In World Economy News 29/05/2015

Greece economy 04.jpg
Greece will not be able to get the money still available under its current bailout plan if it does not agree the outline of a reforms-for-cash deal with creditors by the end of next week, a euro zone official said.
The message was conveyed to Greek government officials in a teleconference discussion of euro zone deputy finance ministers, the Euro Working Group, who prepare the meetings of euro zone finance ministers.
The institutions representing Greece’s creditors — the European Commission, the International Monetary Fund and the European Central Bank — said progress in talks with Greece was too slow and a deal was still out of reach, the official told Reuters, speaking on condition of anonymity.
The main points of contention remain a Greek pension reform, liberalisation of the labour market and the need for Athens to sell more state assets to generate cash — none of which the left-wing government of Alexis Tsipras wants to do.
“To get a disbursement by the end of June there would have to be some kind of an agreement by the end of next week, so that it would be finalised and approved by the EWG meeting on June 11 and then by the Eurogroup and in national procedures — it would all be very tight,” one euro zone official said.
“Basically if there is no agreement by the end of next week, it is impossible to have a disbursement by the end of June. The money is lost,” the official said.
Greece is currently entitled to get 1.8 billion euros that remain under its existing bailout deal. But the arrangement expires at the end of June and with it the legal possibility of disbursement.
The existing arrangement also gives Greece the right to use almost 11 billion euros for shoring up its banks, if needed. That money, which would form the basis of a new rescue programme, would also be lost, the official said.
“There was no discussion about extending the bailout beyond the end of June,” the official said, adding that Germany, Finland and Austria would find it difficult to ask their parliaments to extend the existing programme for the third time.
Greece’s ability to repay the IMF in June, notably the first, 300 million-euro instalment on June 5, was not discussed either on Thursday.

Source: Reuters (Reporting By Jan Strupczewski; editing by William Schomberg)