Euro zone ready to finalize Greek deal next week, if talks succeed

Wed Apr 20, 2016 11:27am EDT Related: WORLD, GREECE, CAMPAIGN FINANCE
BRUSSELS/ATHENS | BY FRANCESCO GUARASCIO AND RENEE MALTEZOU

Reuters

Euro zone finance ministers are ready to hold an extraordinary meeting next week if negotiations on the review of the Greek reform program are concluded, a senior EU official said on Wednesday, commenting that talks remained difficult.

Discussions between Greek authorities and international lenders have resumed this week in Athens with the aim to conclude a reform review which is a condition to release more bailout money to Greece.



"If there is so much progress that a conclusion of the negotiation can be rationally expected, then I would expect there to be a Eurogroup sometime next week," the senior official said.

Negotiations in Athens are however not smooth, EU and Greek officials said.

"I have hopes but no expectations that they would wrap up everything before the Eurogroup on Friday," the source said referring to the regular meeting of euro zone finance ministers to be held in Amsterdam on April 22.

An option is that negotiations would resume in Athens after the Eurogroup this week, to reach a technical deal that would then be finalised by a new extraordinary meeting of euro zone finance ministers next week, the official said.

The main sticking point in the talks in Athens concerns fiscal issues, as euro zone lenders and the International Monetary Fund continue to battle on Greece's primary surplus, with the IMF considering EU figures too optimistic.

A Greek government official said on Wednesday that the left-led government and its lenders had agreed to raise value added tax to 24 percent from 23 percent as part of tax reforms aimed at saving 1 percent of gross domestic product.

The participants still disagreed on whether the tax-free threshold should be decreased to about 8,000 euros from 9,545 euros, as demanded by its lenders. Athens has suggested a reduction to about 9,000 euros.

Other open issues remained the management of bad loans and pension reforms, from which Athens plans to save another one percent of GDP.

DEBT HURDLE

Talks are complicated by the need to find a deal on how and when to reduce Greece's huge public debt.

The IMF wants a compromise on this issue before concluding the review, while euro zone countries, and in particular Germany, want to first end the review and then start talking about a possible debt relief for Athens.

"There are huge differences in attitudes towards debt-related measures between institutions, member states and the like, and the range is quite significant," the senior EU official said.

Echoing German positions, Finland's Finance Minister Alexander Stuff said on Wednesday that there is very little room to maneuver on Greece's debt relief.

"We will overcome this difficult turning point and a very crucial discussion for the debt relief will start," Greece's Prime Minister Alexis Tsipras told Greek lawmakers on Wednesday.

(Additional reporting Jan Strupczewski in Brussels and Tuomas Forsell in Helsinki; editing by Ralph Boulton)