Friday, 10 March 2017

Progress in Greek bailout review talks, labour issues remain open

In World Economy News 10/03/2017

Greece and its international lenders are close to a deal on its bailout review but differences remain on labour issues, the government’s spokesman said.
Dimitris Tzanakopoulos said a comprehensive deal would include a change in Greece’s fiscal mix from 2019 and clarity on medium-term debt relief measures.
“Our aim is to have the discussions on a staff-level agreement concluded by the next Eurogroup meeting (of euro zone finance ministers) of March 20,” he told reporters.
Creditors started fresh negotiations with Athens last week on signing off on a new bailout review under the terms of the country’s 86 billion euro (74.78 billion pounds) financing facility.
The talks at a central Athens hotel wrapped up on Thursday, and will continue via teleconference over the coming days, a senior government official said.
The European Stability Mechanism and the European Central Bank, which participated in the talks, also said the aim was to “rapidly” reach a technical agreement that could lead to a political deal at the March 20 Eurogroup meeting.
Tzanakopoulos said a deal would allow Greece to participate in the European Central Bank’s asset purchase programme and return to financial markets.
“Once we have a comprehensive agreement, there will be a discussion by the ECB on including Greece in QE (quantitative easing). I think there will be a positive development on this issue.”
Greece in 2015 signed up to its third bailout since the debt crisis started. Negotiations with lenders on its bailout performance have dragged on for months mainly due to a rift between the European Union and the International Monetary Fund over fiscal targets.
Greece’s reference to a “comprehensive deal” includes a staff-level agreement with lenders on energy and labour reforms and fiscal issues, clarity on medium-term debt restructuring, and another batch of fiscal measures from 2019 to keep the primary surplus – excluding debt servicing costs – at about 3.5 percent of Gross Domestic Product.
EU officials cited “important progress” on a number of key reforms in the financial sector and the package of fiscal measures for 2019, which the leftist-led government agreed to legislate to help speed up the talks.
But the IMF, which has not decided if it will participate financially in Greece’s current bailout programme, said Prospects for an agreement were still unclear.
The IMF said Greece cannot maintain high primary surpluses unless it adopts more belt-tightening and is granted further debt relief by the EU. The fund is also seeking a relaxation to labour laws, including freeing up mass layoffs.
“Views of the IMF and Greece are different. We will try to bridge these differences,” Tzanakopoulos said.
IMF spokesman Gerry Rice noted progress in the negotiations but said he was not aware of any IMF board discussions over a specific financial contribution.
“There has been progress in some important areas and we welcome that. However, differences remain in important areas,” Rice told a news briefing.
He said in a later statement that the progress included discussions on a balanced fiscal package and financial sector reforms. Talks would continue next week on pension and labour market reforms, Rice added.
IMF participation in Greece’s bailout is viewed as key for Europe, with national elections looming in the Netherlands, France and Germany.

Source: Reuters (By Lefteris Papadimas and Renee Maltezou, Additional reporting by Michele Kambas and George Georgiopoulos in Athens, Francesco Guarascio in Brussels and David Lawder in Washington; Editing by Robin Pomeroy and Richard Chang)