Greece, which is in its third bailout program since the economic crisis hit in 2010, is in disagreement with lenders concerning fiscal targets as well as the scope of reforms that would need to be implemented in order for its latest evaluation on bailout progress to be concluded.
Eurozone ministers want Greece to maintain a primary fiscal surplus of 3.5% beyond 2018 without specifying for how long. They have also left open the question of longer-term debt relief. Such a surplus would necessitate a heavier tax burden on Greek taxpayers and more pension cuts, who have already been brought to their knees by a deepening recession.
Nonetheless, Finance Minister Euclid Tsakalotos said that Greece wants to end a reform standoff with its creditors through “honest compromise,” but has warned that inflexibility on the EU’s part could stoke anti-establishment sentiment in Europe.
Tsakalotos has said he anticipates a deal that could allow Greece’s inclusion in an ECB asset-buying program by the spring of 2017, that would allow Greece to test markets with a debt issue later in the year.
EU and IMF mission chiefs had left Greece last month without a deal over key bailout issues, notably, labor and energy reforms. Teleconference talks will continue between the two sides until it is deemed that enough progress has been made for direct talks to resume, probably within the week.
Tsakalotos has argued that a delay in signing off on the bailout review will weaken economic recovery, an early return to markets and further deepen the conviction that Europe was out of sync with its citizens and not solving problems.
“We don’t go to the institutions with “this is our stance; take it or leave it,” said the finance minister. “we try to respond to their criticisms, when they have objections to the nature of our structural measures, and we are willing to discuss all those issues in good faith.”