Greece Says Compromise Not Possible Under Current Conditions

 Bloomberg

by Marcus BensassonEleni Chrepa

5:25 PM EEST

May 5, 2015

Greece blamed international creditors for the failure to end the impasse over its fiscal crisis, clouding the outlook for talks that some officials had said were making progress.

No deal will be possible until the European Commission and the International Monetary Fund agree to a common set of demands, a government official said on condition of anonymity. Taken together, there are too many red lines and creditors need to better coordinate their message, the official said.

IMF spokeswoman Angela Gaviria said in an e-mail that she had no immediate comment. A European Commission spokesman wasn’t immediately available for comment.

The remarks came as investors reined in their optimism that Greece would soon be in a position to clinch an agreement guaranteeing the flow of central-bank liquidity and bailout funds. Yields on two-year notes rose 151 basis points to 21 percent, while the benchmark ASE stock index fell 3.9 percent at the close of the trading day in Athens.

Compounding the confusion, Greece’s latest comments came just as European Economic Affairs Commissioner Pierre Moscovici tweeted that progress was being made following a meeting with the Greek Finance Minister Yanis Varoufakis.

They also came minutes before a meeting between Deputy Prime Minister Yannis Dragasakis and European Central Bank President Mario Draghi in Frankfurt.

“I just met Yanis Varoufakis about the significant progress of the Brussels Group and to prepare a useful Eurogroup on Monday,” Moscovici said.

Red Lines

Euro-region finance ministers are next scheduled to meet on May 11, with Germany’s Wolfgang Schaeuble saying earlier he’s “skeptical” that an agreement can be reached by then.

Greece’s new line of argument focuses on what it says are divisions among the international creditors. The IMF won’t compromise on labor deregulation and pension reforms, while the European Commission is insisting on fiscal targets being met, said the government official, who spoke on condition of anonymity because the talks are confidential. The commission is also refusing to consider a debt writedown, he said.

Greece is sending mixed signals about just how much money it has left. While officials say they’re confident of making payments to the IMF this week and next, one policy maker signaled last month that the country may struggle to keep its finances afloat beyond the end of May.

French Finance Minister Michel Sapin said Tuesday there’s room for a accord between Greece and its euro-area partners. “We are at a decisive moment and we have the ability to reach a good compromise,” he said in a statement after meeting Greece’s Varoufakis in Paris.