Greece prepares for high-risk talks amid default fears

Newly elected govt hopeful creditors will give more time to renegotiate bailout

ATHENS: Greece’s hard-left government was to fine-tune its economic programme ahead of a week of high-risk international talks but with no sign so far of an imminent deal with its creditors.

Days before an extraordinary meeting of Eurozone ministers and an EU summit, the new Greek cabinet was to meet for the third time in two days to thrash out details of a key policy speech being delivered on Sunday by Prime Minister Alexis Tsipras.

With Tsipras and his ministers still adamant that Athens be given more time by creditors to renegotiate its controversial bailout, the speech outlining the new government’s legislative agenda will be closely watched around the globe.

The government that took office January 26 promising to end austerity and slash Greece’s debt mountain on Friday called for temporary funding from its EU partners, saying it wanted to negotiate a new deal “without pressure and blackmail”.

The European portion of Greece’s massive €240 billion ($275-billion) EU-IMF bailout is due to expire at the end of the month and Athens is under pressure to do a quick deal or ask for an extension.

With neither move looking likely, credit ratings agencies warned Friday that Greece was heading closer to defaulting on its loans, a move that could see it exit the Eurozone. Standard & Poor’s downgraded Greece to just one notch above the range indicating vulnerability to a default, and warned of a “worst-case scenario” where it left the single currency.

Moody’s said it was placing Greece on review for a downgrade because of “considerable uncertainty regarding the outcome of the ensuing negotiations.”

Germany says it expects Athens to present a plan dealing with debt repayment and economic reforms to a meeting of eurozone finance ministers on Wednesday. Italian Finance Minister Pier Carlo Padoan said the goal at the Eurogroup meeting was not to set up a confrontation with Greece but to “look for shared solutions”.

Greece will also be on the agenda of the G20 finance ministers meeting in Istanbul on Sunday, while Tsipras will have his first face-to-face talks with German Chancellor Angela Merkel at a European summit in Brussels on Thursday.

Meanwhile Economy Minister Georges Stathakis on Saturday denied a newspaper report that Greece would run out of cash next month, insisting he had been misquoted.”

There will be no problem before the summer and an agreement is reached” with European partners, he said. Greece is expected to return to growth this year after six years of recession that has left it with sky high unemployment and its economy in tatters.

But after the European Central Bank pulled the plug on a key source of funding for Greece’s banks this week, the banks– and by extension the state– are now reliant on the Frankfurt bank’s emergency liquidity funds. 

Published in The Express Tribune, February 8^th, 2015.

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