France demands deal on third Greek bailout be reached next week

French President Francois Hollande wants an agreement on Greece's third bailout to be reached by eurozone finance ministers next week, a government spokesman said Wednesday.

Athens and its creditors have struggled for months to agree on reforms and cost-cutting measures that would allow the cash-strapped country to continue receiving bailout aid. There are concerns that Greece is now nearing the brink of bankruptcy once again.

Eurozone finance ministers will hold a special meeting Monday afternoon to review the negotiations' progress.

"France wishes to have an agreement Monday on Greece," government spokesman Stephane Le Foll said. "This is a message I insist on. The president has said it very clearly."

In Athens and Brussels, however, expectations for the ministers' Eurogroup meeting were being downplayed. Sources in the Greek capital said on condition of anonymity that an agreement was not within reach, while others in Brussels said the aim now is to reach a deal at the next Eurogroup meeting on May 24.

EU President Donald Tusk has called on the ministers to deliver before a summit of the G7 leading economies on May 26-27.

"During these challenging times, both in terms of geopolitics and economics, we need to make sure that Europe contributes to stability rather than global instability," Tusk said Tuesday. "We should do all in our power to dispel uncertainties."

"The situation of Greece ... can be a point of fragility for the eurozone," Le Foll added. "So we must retain the line of the eurozone, which is stability and return to growth."

The bailout negotiations have been complicated by creditors demanding a set of new cost-cutting measures that would be implemented if Greece's finances go awry.

The creditors would like them to total 2 per cent of gross domestic product (GDP), or about 3.5 billion euros (4 billion dollars), which come on top of a previously required package of reforms and cost-cutting measures amounting to 3 per cent of Greece's GDP.

The additional contingency measures will give "that extra assurance and confidence" about Greece's future to eurozone countries, investors and markets, Eurogroup chief Jeroen Dijsselbloem has said.

But Finance Minister Euclid Tsakalotos has warned that a contingency approach will prove challenging to implement under Greek law.

The two packages would clear the way for the next tranche of aid to be disbursed under Greece's third, 86-billion-euro bailout.

A highly anticipated discussion about further debt relief for Athens also needs to be held.

"These are not easy topics. It requires a lot of energy, a lot of work, but I think that there is a way [to succeed]," EU Economy Commissioner Pierre Moscovici said Tuesday.

In Athens, meanwhile, the Greek government on Wednesday sold 1.138 billion euros worth of T-bills at a 2.97-per-cent yield to cover upcoming debt payments. The short-term securities mature in 26 weeks.

Greece is facing large debt payments this summer, with 3.66 billion euros due to the International Monetary Fund, the European Central Bank and other creditors in July.

A study released Wednesday in Berlin showed that less than 5 per cent of the funds from the first two bailouts had contributed to Greece's fiscal budget.

According to the study, released by the European School of Management and Technology, 64 per cent of the funds were used to make debt-related payments, and 17 per cent were used to recapitalize the banks.

Last update: Fri, 24/06/2016 - 08:49

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