EU chiefs may need to solve debt relief riddle: Greece


Athens (AFP)

EU leaders could be asked this month to step in and avert deadlock on Greek debt if ministerial talks fail next week, Athens said Wednesday.

"If the disagreements continue... the discussion could be pursued at the European summit" on June 22-23, Greek government spokesman Dimitris Tzanakopoulos told reporters.

"We are not ready to just accept whatever is proposed to us," he said.

But Tzanakopoulos added: "We are working towards a solution" at a meeting of eurozone finance ministers on June 15, an outcome he described as the "most probable."

Talks over Greece's debt mountain -- which stands at 179 percent of GDP -- have been paralysed for months by disagreements between the IMF and European creditors led by Germany.

The Europeans expect Greece's economy to grow strongly and its government to bring in large surpluses in revenue in the coming years, allowing it to pay down its debts.

But the IMF is less optimistic, arguing there must be further debt relief for Athens before it can label its debt sustainable and justify loaning Greece any more cash.

However German leaders are reluctant to offer yet more unpopular debt relief ahead of elections in September, but have also promised lawmakers that the IMF will remain on board.

On Tuesday, International Monetary Fund director Christine Lagarde said the global lender could sign on to a deal between Greece and its creditors before debt relief measures it demands have been agreed.

"There can be a programme in which the payment does not take place until debt measures have been clearly defined by the creditors," she told German business daily Handelsblatt.

Her proposal to agree on the outline of a programme including the IMF, but withholding disbursement of funds until debt relief details are nailed down, is similar to one proposed at the last Eurogroup meeting of eurozone finance ministers in May, which ended without an agreement.

Tzanakopoulos said Athens wanted creditors to specify "with the greatest possible clarity" measures that would lower Greece's gross financing needs to 15 percent of output after 2018.

Berlin says any discussion about debt relief must take place after the end of the 86-billion-euro ($96.7 billion) third bailout programme agreed in 2015, which runs until the middle of next year.

Pressure is on to reach a deal so that Greece can make a payment of around 7.5 billion euros that falls due in July.

All sides are keen to avoid a repeat of the impasse in 2015, before the latest bailout was agreed, that almost saw Greece pushed out of the euro.

The European Central Bank last week called for creditors to create "clarity" at their next meeting on June 15 by striking a deal that restores investors' confidence in Athens -- allowing the Greeks to turn to financial markets for cash in future.