Greek Prime Minister Alexis Tsipras on Friday said his government would not back down from its red lines in negotiations with its foreign lenders, but said a deal must be reached soon following months of talks.
Athens is fast running out of cash and talks with EU and IMF lenders on more aid have been deadlocked over their demands for Greece to implement reforms, including pension cuts and labor-market liberalization.
Tsipras said the two sides had largely agreed on fiscal targets and value-added tax rates, but disagreed on labor issues and pension reform. He said an accord should include low primary budget surplus targets for this fiscal year and a debt restructuring.
“The deal must close there is no doubt about it,” Tsipras told a press conference. “However, some cannot have in the back of their minds the idea that, as time goes by, the Greek side’s resilience will be tested and its red lines will fade out. If some people have it in the back of their minds, they should forget it.”
Athens has depended on money from its 240 billion euro (US$275 billion) EU/IMF bailout to keep paying its bills since 2010. It has not received any loan tranches since August last year. Greece hopes to reach a deal by the end of the month.
Earlier on Friday, the Greek Ministry of Finance said it had paid public sector wages due in the middle of this month, confirming scheduled payments as the country struggles to stay solvent, although it might find it harder to meet wage and pension commitments later this month, as well as debt payments due next month.
For months, the government has been borrowing from different parts of the state administration to pay the wages and pensions of public sector workers.
Tsipras, who came to power in January on promises to end austerity measures, said the government would not agree to further cuts to wages and pensions, a highly sensitive issue in Greece, which is in the midst of a six-year recession, rising poverty and joblessness.
“From this podium I want to assure the Greek people that there is no possibility or chance that the Greek government will back down on pension and labor issues,” he said.
Meanwhile, ratings firm Fitch kept Greece’s high-risk credit rating unchanged on Friday, saying the risk that the eurozone country would default on its debt was a “real possibility.”
Fitch Ratings affirmed the “CCC” rating it gave the debt-riddled eurozone country in late March in a two-notch downgrade from “B.”
“Lack of market access, uncertain prospects of timely disbursement from official institutions and tight liquidity conditions in the domestic banking sector are putting extreme pressure on Greek government funding,” Fitch said in a statement. “We expect that the government will survive the current liquidity squeeze without running arrears on privately held bonds, but default is a real possibility.”
The ratings firm forecast zero growth in the economy this year, with risks “heavily tilted” toward a contraction, as the country runs out of cash and faces debt payments to its creditors.
Still, Fitch said it was likely that Greece would reach a compromise deal with its official creditors.
Additional reporting by AFP
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