Greece Hurtles Toward IMF Deadline as EU Demands Concessions

by Anabela ReisFrancine Lacqua

1:55 PM EEST

May 5, 2015

Bloomberg

Euro-area finance chiefs urged Greece to bow to their terms for releasing aid within days to avert a cash crunch.

With Greek officials fanning out across the continent to plead their case, Portuguese Finance Minister Maria Luis Albuquerque warned Tuesday that the currency bloc won’t make contingency plans to prepare for a possible breakdown in talks and encouraged Greek Prime Minister Alexis Tsipras to take the offer on the table.

“It has been difficult but we still hope it will be possible to have a good outcome of this discussion,” Albuquerque said in a television interview in London.

European officials are concerned that Greece may struggle to meet its obligations this month unless Tsipras drops his opposition to cutting pensions and making it easier to fire workers. His government faces about 1 billion euros ($1.1 billion) in payments to the International Monetary Fund coming due on top of public workers’ salaries and pensions.

The euro fell for a third day on Tuesday as the time left to release aid ahead Greece’s payment deadlines ran down. The currency lost 0.2 percent at 11:47 a.m. London time to $1.1119 and Greek stocks fell 3.3 percent.

Germany’s Wolfgang Schaeuble said he’s “skeptical” that the euro-area finance ministers will be able to reach a deal at their next meeting on May 11. Spanish finance chief Luis de Guindos held out the prospect of some flexibility on the conditions for releasing aid at a committee hearing in the parliament in Madrid, even as he highlighted Greece’s perilous financial position.

“We are confident that there will be some steps ahead in the coming days,” de Guindos said. “It’s important that that happens because Greece’s liquidity situation is getting increasingly complicated.”

Diplomatic Push

As negotiations aimed at easing Greece’s liquidity crisis continue, Greek Finance Minister Yanis Varoufakis held a “useful” meeting with his French counterpart Michel Sapin in Paris, according to an e-mailed statement from the government in Athens.

Varoufakis will also meet European Economic Affairs Commissioner Pierre Moscovici later in Brussels and Deputy Prime Minister Yannis Dragasakis will meet European Central Bank President Mario Draghi at 5:30 p.m. in Frankfurt.

Tsipras has also spoken with International Monetary Fund Managing Director Christine Lagarde about the state of the negotiations, the IMF said late Monday.

The European Commission explained Tuesday how the impasse over Greece’s fiscal crisis is strangling the economy, making it harder to meet the targets set out in the bailout program as talks to ease its liquidity squeeze drag on. In its spring forecasts, published in Brussels, the commission sees the Greek economy growing just 0.5 percent this year, down from 2.5 percent in February.

“The conditions to support growth are in place but uncertainty and tighter financing conditions are holding back the recovery and weighing on public finances,” the commission said. Even though the economy grew for the first time since 2007 last year, positive momentum has been “hurt by uncertainty since the announcement of snap elections in December,” it said.