Eurozone closes in on deal to unblock Greek bailout

Eurozone finance ministers are closing in on a deal to unblock Greece’s €86bn bailout programme and end months of uncertainty over whether the country will be able to make €7bn in debt repayments next month.

Diplomats and European officials expressed confidence that, barring last-minute surprises, an agreement was in sight at a meeting in Luxembourg on Thursday.

“A deal today is not only possible, it is essential,” Pierre Moscovici, the EU’s economy commissioner, told the Financial Times. “The citizens of Greece and the rest of Europe could simply not understand if after so many months of hard work and concrete progress, the eurogroup again does not reach an agreement.”

Talks could run into the night as details are thrashed out.

Greece’s bailout programme is the third international rescue effort since the country plunged into economic turmoil in 2010. Athens teetered on the brink of exiting the euro in 2015, before brokering a deal with euro area leaders on further financial support.

The future of that €86bn rescue package, administered by the eurozone bailout fund, the ESM, has become enmeshed in talks on how to bring the International Monetary Fund in as a partner and how to ease the country’s debt burden.

Officials said the most likely deal would see the IMF formally join the Greek programme, but hold back from providing money to Athens until the euro area provides a greater level of detail on the debt relief it is willing to offer the country.

This would end a situation in which Berlin has insisted that the IMF participate in the bailout before it will release any more money to Athens, while the Washington-based fund has said Germany and other eurozone countries need to offer Athens major debt relief to make its repayments sustainable.

Such an arrangement would fall short of Athens’ expectations, but would unblock much needed money from its aid programme.

Sources said Athens’ concerns about the plan have been partially eased by a French proposal to link the country’s debt repayments to the strength of its economic growth. EU diplomats said the idea had gained traction in preparatory talks as a way to bridge competing views of the future sustainability of Greek debt.

Talks were “nearing a common landing ground”, a French finance ministry official said on Wednesday. “The idea is not just to allow Greece to honour its short-term debt requirements but also give some visibility to the Greek people and investors” of what is to come, he said.

If Thursday’s meeting ends without agreement, it would leave little time for a compromise before Greece needs to make debt repayments. A failure to do so could wreak havoc on Greece’s economy.

Alexis Tsipras, writing in France’s Le Monde and Germany’s Die Welt this week, said Greeks were “full of hope and expectation for this meeting of finance ministers. Because we have done everything we owe.”

Mr Tsipras has suggested that European leaders may need to broker an agreement if ministers cannot solve the issue but the prospect has little support from other capitals.

The potential deal would buy time until after the German elections and potentially until the end of the Greek bailout in 2018 for euro area governments to flesh out options for debt relief.

Ministers have consistently said that final decisions on debt relief will only be taken at the end of the programme.

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