Greek Prime Minister Alexis Tsipras has to now start supporting his intentions with policy action after telling his country’s international creditors the government is committed to intense discussions to avoid a default at the end of the month, German Chancellor Angela Merkel has said.
“The willingness is there to cooperate with the three institutions, it’s now a matter of acting on that,” Merkel told reporters after arriving for a meeting between EU and Latin American leaders on Thursday.
“There was absolute unity that Greece will continue to work emphatically and resolutely with the three institutions in the coming days to clear up all open questions as far as possible.” she said.
Tsipras said his government will work with “higher intensity” to find a deal, a Greek government spokesman said in e-mailed statements, following talks held between the Greek Prime Minister Alexis Tsipras and Greece’s creditors in Brussels on Wednesday. The discussions, which included Merkel and French President Francois Hollande, took place in a “constructive atmosphere,” the spokesman said.
Greece’s creditors are waiting for Tsipras to deliver new economic and budgetary reforms, with the country’s financial system near collapse.
Greece has until the end of the month to release a payment of about $8.2 billion from its rescue package before the agreement expires.
Tsipras is asking for a nine-month extension to the bailout deal to have more time to work on the reform programme, according to Greek officials.
The European Central Bank lent Greece support on Wednesday by raising the cap on emergency funding by $2.6 billion to replace deposit outflows. Before the ECB stepped in the Greek banks’ cash reserves were estimated to be down to about $784 million.
European stocks jumped on Thursday, extending Wednesday's rally, due to optimism regarding the Greek talks. The Stoxx Europe 600 was 0.4 percent up mid-morning, after rising 1.8 percent on Wednesday. Athens' main stock index climbed as much as 6.2 percent late morning trade on Thursday. Germany's DAX also rose 0.7 percent, France's CAC-40 0.6 percent and the UK's FTSE 100 0.3 percent.
In a separate development, international credit rating agency Standard & Poor's downgraded Greece's sovereign rating by one notch to CCC from CCC+ on Thursday, after the country delayed a debt payment to the IMF last Friday. The agency questioned whether Greece’s debt was sustainable, with its government prioritising pension payments and domestic spending over servicing its debt obligations.
Without a deal between Greece and its EU/IMF creditors, "the Greek government will likely default on its commercial debt within the next 12 months," the rating agency stated.