Greece reiterates necessity of striking debt deal in May

Greece says it needs to seal new debt agreement with its creditors until end of May as money drains

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Greek government said on Monday that it needs to come to a conclusion in debt talks in order to clinch a deal with its international creditors until the end of May, as the country’s financial-economic outlook underwent into the edge of bankruptcy.

Athens reiterated the need for an emergent debt deal before the country announces possible bankruptcy, but said it would not abandon its "red lines" in talks with the International Monetary Fund (IMF) and eurozone creditors.

Greece’s new government led-by left-wing Syriza Party could not have agreed on a number of issues so far, such as debt restructuring, a lower target for the primary surplus to take in more than it spends apart from debt interest payments, and a pledge to make no further cuts to pensions or wages, all of which were said to be Athen’s red lines.

"We are not putting red lines because we have a fetish about these red lines," said Greek Government spokesman Gabriel Sakellaridis. "We think they are necessary elements of a deal so that we don't once again have the problems of the past."

Meanwhile, eurozone’s driving force Germany warned Greece again to fulfill necessary reforms in order to stave off years of bitter austerity as well as unlocking eurozone fiscal aid package.

German Finance Minister Wolfgang Schaeuble suggested on Monday that Greece might need to hold a referendum for the necessary economic reforms to be approved.

Germany's central bank (Bundesbank) urged the Greek government to maintain the path of reform to reach bailout money from the European Central Bank.

"A sustainable solution is not possible without substantial reform in Greece," the Bundesbank said.

Greece has been negotiating with its creditors over the past four months about the release of some 7.2 billion euros in aid.

Sakellaridis said Greek government might pay salaries of public services together with pensions, but made clear cash was running out, with the state owing the IMF some 1.5 billion euros ($1.70 billion) next month.

"There should be a solution in May so we can resolve our liquidity issues," he told reporters in a news conference.

The newly-elected Prime Minister Alexis Tsipras’’ Syriza government has been under pressure for the past three months from both inside and outside since Greece has been grappled with an overwhelming debt crisis in the recent years.

Tsipras’ Finance Minister Yanis Varoufakis has started to negotiate the country’s debt crisis immediately after the left-wing Syriza Party came to power at the end of February.  

Athens is heavily indebted to the EU and the IMF, almost 240 billion euros, since the eurozone economic crisis seriously hit the country from 2009 to the present.

Before the general election, Tsipras’ Syriza Party had vowed to terminate the EU’s unilateral financial acts over Greece, but in reality the Syriza Party has so far continued to review Greece’s financial stability in order to get new loan money from the Union.

The EU however entails the maintenance of financial-economic reforms if the Syriza government in Greece wants to get more funds from the EU creditors.

Talks between the parties have slowed down as Tsipras-Varoufakis leadership was resisted to cut money in pensions and labour reforms that would clash with the pre-election Syriza campaign pledges to end austerity.

Greek PM Tsipras and German Chancellor Merkel spoke in a private telephone conversation last month, agreeing to keep in touch until Athens and its lenders reach an ultimate debt deal with the international creditors.


TRTWorld and agencies