Business

Greece needs to seize 'last opportunity' for deal

  • 18 June 2015
  • From the section Business
Media captionYanis Varoufakis: "We are dangerously close to a state of mind that accepts an accident''

Greece needs to seize a "last opportunity" to reach a deal with its creditors, the head of the Eurogroup, Jeroen Dijsselbloem has said.

He was speaking after a meeting of European finance ministers that ended with no agreement on Greece's debt.

Mr Dijsselbloem called on Greece to submit "credible" proposals in the coming days.

To help tackle the crisis, an emergency summit of leaders from Eurozone nations has been called for next Monday.

Mr Dijsselbloem highlighted that "very little time remains" as Greece's current bailout programme runs out this month.

Media captionEurogroup President Jeroen Dijsselbloem: ''The ball is clearly in the Greek court''

"It is still possible to find an agreement and extend the current programme before the end of the month, but the ball is clearly in the Greek court to seize that last opportunity," Mr Dijsselbloem said.

The Greek finance minister, Yanis Varoufakis, said his nation had presented a "comprehensive" proposal and that disagreement only existed over spending equivalent to 0.5% of Greek GDP, which he says does not constitute a "dangerous impasse".

He highlighted that Greece has already made a "gigantic adjustment" over the last five years and rejected any measures that would "jack-up" taxes and reduce benefits further.

And he warned that negotiations were "dangerously close to a state of mind that accepts an accident".

Looming deadline

Greece has less than two weeks remaining to strike a deal with its creditors or face defaulting on an existing €1.6bn (£1.1bn) loan repayment due to the IMF.

The country has already rolled a €300m payment into those due on 30 June.

If it fails to make the payment, it risks having to leave the eurozone and possibly also the EU.

But the European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock bailout funds until Greece agrees to reforms.

They want Greece to implement a series of economic changes in areas such as pensions, VAT and on the budget surplus before releasing €7.2bn of funds, which have been delayed since February.


Greece - deal or no deal?

  • Option 1: No deal: Greece defaults on IMF and ECB repayments; ECB pulls plug on emergency bank assistance leading to run on Greek banks, capital controls and potential Grexit
  • Option 2: Greece agrees reform deal with creditors at last minute and avoids default, staying in euro
  • Option 3: No deal reached but both sides paper over cracks and Greece stays in euro for now

Peston: Will ECB keep Greece afloat?

Walker: The options for Greece

What impact would Grexit have on UK?


Pressure was also raised on Greece earlier on Thursday when the boss of the International Monetary Fund (IMF), Christine Lagarde, warned there was "no period of grace" for Greece over its impending debt repayment deadline.

She said Greece would be in default on its loans from the IMF if it failed to make a €1.6bn (£1.1bn; $1.8bn) payment on 30 June.

Ms Lagarde maintained that the international institutions had always shown flexibility towards Greece's situation.

Media captionChristine Lagarde: ''Everything is about give and take''

'Commitments'

Earlier German Chancellor Angela Merkel said she was "still convinced" that a Greek debt deal was possible.

In her statement to the German parliament, Mrs Merkel said Germany was working hard to keep Greece in the euro, but said Athens had to follow through on reform commitments.

"I'm still convinced - where there's a will, there's a way," she said.

"If those in charge in Greece can muster the will, an agreement with the three institutions is still possible."

'Lavish pensions'

In another development, Greek Prime Minister Alexis Tsipras denied allegations that elderly Greeks were receiving lavish pensions.

Writing in the German newspaper Der Tagesspiegel, he said: "The problem is not one of supposed generous pensions. The most significant disruption to the pension funds is due to dramatically lower revenues in recent years.

"These were caused by... the sharp drop in contributions that resulted from soaring unemployment and the reduction in wages."


Greek debt talks: main sticking points

  • Greece will not accept cuts to pension payments or public sector wages, saying two-thirds of pensioners are either below or near the poverty line
  • International creditors want pension spending cut by 1% of GDP - it accounts for 16% of Greek GDP. They say their target is early retirement not individual pensions
  • EU officials say Greece has agreed to budget surplus targets of 1% of GDP this year, followed by 2% in 2016 and 3.5% by 2018. Greece says nothing is agreed until everything is agreed
  • Creditors also want a wider VAT base; Greece says it will not allow extra VAT on medicines or electricity bills
  • Greece complains creditors focus on increasing taxes instead of cracking down on tax evasion; IMF is concerned Athens is not offering credible reforms

Is Greece close to Grexit?

EU solidarity damaged by Greek splits