PARIS--Greece's
international creditors are looking at extending the country's bailout program
by up to six months, two eurozone officials said Wednesday after two days of
marathon negotiations with the country's officials here failed to reach an
agreement.
The IMF and
Germany, often aligned when it comes to the Greek bailout program, back the
idea, a second official said.
The talks
in the French capital, which began Tuesday afternoon and continued almost
nonstop for 24 hours, were aimed at wrapping up the final review of the
country's austerity and reform program. They come as Greece fast approaches a
year-end deadline to hammer out a new financing deal with creditors.
The
financial markets have looked negatively on the possibility of Greece's early
exit from the program. In addition, Greek banks could be cut off from the
European Central Bank's cash lending if Greece is not under internationally
approved supervision.
Greece's
plans to shed itself of the troika's oversight, has also worried investors.
During the last two months, Greek government bonds, which rallied for much of
2014 and allowed Greece to return to the capital markets after a four-year
hiatus, have slumped. Greece's 10-year bond yield remains close to 8%, well
above its September low of around 5.5%. Yields have risen as prices and demand
have fallen.
Both sides
said some progress has been made in the talks but significant differences
remain, with Greek officials citing disagreements over the country's budget
targets for next year as being a particular sticking point.
"The
timetable is very tight," said a Greek official who took part in the
negotiations. "This review is unusual, since it's the last one."
To get an
extension of its current program, the Greek government would have to formally
request it by the end of next week, the first eurozone official said. This
would give national parliaments in the eurozone countries enough time to
approve the extension before the Christmas recess. That process can be
prolonged in such countries as Germany and Finland.
Next week's
deadline would also apply to the now-unlikely application for a new credit line
if Greece's creditors conclude the review on time, the official added.
Since the
Greek debt crisis erupted in late 2009, Greece has been bailed out with two
successive rescue packages totaling EUR240 billion ($300 billion) from the EU,
ECB and IMF.
The aid has
come with strings attached: tough austerity measures to fix the country's
public finances and far-reaching reforms to overhaul its economy.
Now, with
its public finances improving and the economy returning to growth, Greece's
two-party coalition government--made up of the conservative New Democracy and
socialist Pasok parties--have set a goal to leave the bailout program, or scale
back the degree of control international authorities exercise, at the end of
the year.
That would
be 18 months earlier than the rescue plan now calls for and would require an
agreement with eurozone partners and the IMF, ideally in time for a Dec. 8
meeting of eurozone finance ministers, over a contingent credit line to be put
in place. Following the talks in Paris, it seems that the deadline may already
be lost.
Greek
Finance Ministry Secretary General Anastasios Anastasatos was due to head to
Brussels for a meeting of senior eurozone finance ministry officials Thursday.
The officials are expected to review the latest discussions over the Greek
program and will set the agenda for next month's Eurogroup meeting.
Another
option, if the current review is not concluded on time, is for Greece to get a
'technical' extension of its program by a month, and take up the new credit
line in February, according to the senior eurozone official. This would allow
eurozone members to approve the credit line after Christmas.
"We
had very intensive and constructive talks during the last two days; we will
continue our dialogue intensively," European Commission representative
Declan Costello told reporters, as he was exiting the Organization for Economic
Cooperation and Development building where the meetings took place.
However,
Mr. Costello declined to give specifics on when and where the talks would
resume. The latest round of negotiations, which likewise began in Paris in
September before moving on to Athens, has come to a virtual standstill in the
past month.
In a sign
of the stalemate, last week Greece submitted to parliament its 2015 budget
without the express approval of the troika, who question the forecasts
contained in the budget. Greece is aiming for a minor budget deficit next year
of EUR338 million, equivalent to just 0.2% of gross domestic product, in effect
marking the first balanced budget it has produced in four decades. The troika
sees the government's budget deficit next year at closer to 3% of GDP and has
asked Greece to make between EUR1.8 billion and EUR3.5 billion in additional
cuts for 2015.
International
lenders are also calling for more unpopular reforms, such as introducing
further changes to the pension system and loosening labor laws.
So far, the
government has balked at those demands, fearing that further austerity measures
could quash a nascent economic recovery that has taken hold following six years
of recession, as well as resistance from its own deputies in parliament.
Facing
slumping approval ratings, the coalition is hoping that by negotiating an exit
from the country's bailout program, it will boost its standing with voters.
By March,
parliament will need to elect a new president by a supermajority of at least
180 votes, out of a total of 300, or else face a dissolution that would result
in a national election.
The first
eurozone official said the creditors would prefer the program conclude after a
general election likely to occur in the first half of 2015, given that Greece
won't need cash immediately.
(Πηγή: marketwatch.com)
