Greece mulls extra cuts to clinch EU-IMF debt talks: source

3 min

Athens (AFP)

Greece is examining a proposal by its creditors for additional cuts in return for debt relief, a government source said Monday as reform talks with senior EU-IMF officials were due to resume.

"Among various proposals... is one for additional measures decided now, but applied only if we do not (meet 2018 fiscal targets)," the source said.

"The Greek government has not accepted this proposal, and its final position will depend on the entire package, which will evidently include debt relief," the official added.

Another source close to the talks said the move was designed to overcome IMF reservations to economic forecasts put forward by Greece and the Europeans, which it deems too positive.

"This option would give a way out of the 'dispute' with the IMF," the second source said.

Germany, France, Italy, Spain and the Netherlands -- holders of the rotating EU presidency -- are believed to be favourable to what has been called an "optional supplementary package."

Greek financial daily Naftemboriki said the extra measures could amount to 2.7 billion euros ($3.1 billion).

The talks, which are to resume this week, have mostly hinged on unpopular pensions and tax overhauls and the management of bad loans weighing down Greek banks.

The IMF worked with the EU on two previous bailouts for Greece since 2010 but the Washington-based lender has said it would not participate in the third rescue plan Athens brokered with the EU last year without credible reforms and an EU agreement to ease Greece's soaring public debt.

Greece has offered to make 5.4 billion euros in cuts but the IMF says some 8.0 billion euros in savings are needed to meet a primary surplus target of 3.5 percent of output in 2018.

Talks in Washington over the weekend "proved there is convergence but also important differences," the Greek government source said.

European Commission spokesman Margaritis Schinas on Monday said a eurozone meeting on Friday would be an "important moment" to take stock of progress.

"We have made progress and the momentum should be maintained," Schinas told reporters.

"The Commission considers the discussions on the reforms are moving forward well... we need a package of reforms that is coherent, economically efficient, socially fair and financially balanced," Schinas said.

Leading eurozone power Germany insists on the IMF joining the new bailout but continues to resist debt relief for Greece, which is a key IMF condition, the Greek source said.

Greek Prime Minister Alexis Tsipras on Saturday said the talks could conclude by May 1.

"I believe the target I have specified, to conclude (the talks) by Orthodox Easter (on May 1)... is feasible," Tsipras told state television ERT.

According to Greek reports -- which the government has denied -- Tsipras last week warned in talks with French President Francois Hollande and European Parliament President Martin Schulz that further delay could destabilise his coalition government, which has only a slim majority in parliament.