The Greek government signaled the biggest concessions so far as talks with lenders on a cash-for-reforms package started in earnest on Thursday. However, it also tried to assure leftist supporters it had not abandoned its anti-austerity principles.
Greek Prime Minister Alexis Tsipras’ three-month-old government is under heavy pressure at home and abroad to reach an agreement with European and IMF lenders to avert a national bankruptcy. A new poll showed that more than three-quarters of Greeks feel Athens must strike a deal at any cost to stay in the eurozone.
An enlarged team of Greek negotiators began talks with the so-called Brussels Group representing the eurozone, the IMF and the European Central Bank (ECB) to discuss which reforms Greece will turn into legislation rapidly in exchange for aid.
The talks are expected to continue until tomorrow, with Tsipras willing to step in to speed things up if necessary, a Greek official said. In a sign of seriousness, both sides agreed on a news blackout at the meeting, a eurozone official said.
Greece wants an interim deal by next week, hoping this will allow the ECB to ease liquidity restrictions before a 750 million euro (US$843 million) payment to the IMF falls due on May 12. Athens has suggested it will struggle to pay the installment.
Before that, it also has to repay 200 million euros to the IMF by Wednesday, although this is expected to be less of a problem.
Eurogroup President Jeroen Dijsselbloem said at a meeting with members of the Dutch parliament that the bloc was prepared for any outcome.
Asked whether there was a “plan B” should Greece default or be forced out of the eurozone, he said: “[Is] the eurozone prepared for eventualities, the answer to that is: ‘yes.’”
Elected on promises to end austerity and scrap an unpopular EU/IMF bailout program, Tsipras had so far refused to give ground on his “red lines” — pensions, labor reform and state asset sales.
After a preparatory meeting of senior Greek officials on Wednesday, a top government official said Athens was willing to sell a majority stake in its two biggest ports and compromise on value-added tax rates and some pension reforms, in the clearest signal yet that it is ready to back down for a deal.
“The Greek government is ready for an honest solution which will unlock financial aid from partners and put an end to the economic asphyxiation the bailouts have caused,” Greek Finance Minister Yanis Varoufakis, who was sidelined from the bailout talks this week to appease lenders, told Sto Kokkino radio.
However, Tsipras’ office on Thursday denied any climbdown, seeking to assuage hardliners in his Syriza party as he tries to satisfy Greece’s creditors before its coffers are empty.
“The government is sticking to its red lines,” an aide to the prime minister said on condition of anonymity. “The government does not have the popular mandate to reach a deal that crosses red lines and it won’t do that.”
The top Greek official said Athens could consider a flat VAT rate on all goods and services except drugs, foods and books and could adjust supplementary pension payouts, though it insists on not cutting those below 300 euros a month.
The so-called “13th month” payment to pensioners has been a target of some eurozone finance ministers whose countries have less generous systems, but have been lending to Greece as part of the 240 billion euro EU/IMF bailout.
On increasing the minimum wage — a campaign promise by Tsipras that is strongly opposed by lenders — the official said Athens would consult with the Organisation for Economic Co-operation and Development and the International Labour Organisation before taking any action, the official said.
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