Once again Greece has European finance ministers tied in knots

Greece will receive billions of euros to repay the institutions it borrowed money from in time for a crucial July deadline, averting another situation that could plunge the country into crisis – like when it nearly defaulted on its loans in 2015.

But the country will have to wait until next month to receive the funds. EU finance ministers will meet again to formally approve the payout after failing on Monday to agree with lenders on a broader bailout deal for Greece, which has racked up an estimated $350bn worth of debt of dollars.

Lending institutions and finance ministers from 19 eurozone countries have agreed to help Greece repay the nearly $8 billion it is due by July. But that was the easy part of their discussions.

“We are very close to this agreement, but tonight we are not in a position to bridge a possible gap between what could be done and what some of us expected to do,” said Jeroen Dijsselbloem, President of the Eurogroup, which represents the finance ministers. countries that use the euro.

He said ministers needed to consider “additional options or adjust our expectations”.

The group of ministers and representatives of the four lending institutions — the European Commission, the executive arm of the European Union; the European Central Bank; the International Monetary Fund; and the European Stability Mechanism – met in Brussels for nearly eight hours on Monday and walked out around midnight with little to show. They postponed agreement on longer-term debt relief measures for Greece until their next meeting on June 15.

It shouldn’t be beyond the human mind to find that compromise in three weeks.

— Greek Finance Minister Euclid Tsakalotos

The group has been involved in numerous nightly meetings on Greece, whose debt crisis turned into three bailouts from international lenders in 2010, 2012 and a final three-year program worth $95 billion in 2015.

“I am sure that our efforts will not be in vain. They are a very good basis for our next meeting,” said Pierre Moscovici, the European Commission’s Chief Financial Officer.

Greek Finance Minister Euclid Tsakalotos was equally optimistic, telling reporters as he left the meeting: “It should not be beyond the mind of man to find this compromise within three weeks. “.

The talks have been weighed down by repeated stark warnings from the International Monetary Fund that Greece’s debt is unsustainable. The fund left the current bailout program in 2015, saying the country’s economy could not bear the cost of debt.

Germany lobbied to bring the IMF back into the group of lenders as a kind of guarantee that the deal will work, and refused to accept a new bailout loan until the fund joined. Especially now, ahead of Germany’s September election, the country’s leaders are reluctant to approve a bailout deal that voters might perceive as too risky. Germany’s parliament must approve any bailout deal before it can move forward.

Djisselbloem told reporters the fund would be part of the rescue package again before the start of the summer, paving the way for Germany to eventually agree to a deal.

Monday’s talks came four days after Greece’s parliament passed a major austerity bill aimed at saving $4.5 billion over the next three years through pension cuts and wage increases. taxes. Greek leaders wanted the measures to persuade their lenders to accept a bailout.

“We deserve and expect from Monday’s Eurogroup a decision regulating debt relief that matches the sacrifices of the Greek people,” Greek Prime Minister Alexis Tsipras said on Thursday, the day parliament voted.

German Finance Minister Wolfgang Schaeuble told reporters ahead of the meeting that the new Greek law was a “good step”.

“I hope we can find a solution today,” he said.

Schaeuble, a member of Chancellor Angela Merkel’s conservative Christian Democratic Union, recently clashed with German Social Democratic Party politicians over his refusal to approve more payments to Greece without the IMF. .

Sigmar Gabriel, Germany’s Social Democratic vice-chancellor, told the daily Sueddeutsche Zeitung on Monday that Germany would have to agree to a bailout deal.

“Greece has always been promised debt relief when its reforms are implemented,” he said. A bailout should not “fail because of German resistance”.

The European Commission said in its latest economic forecast for its 28 member states, released last week, that delays in reaching a deal on Greece’s bailout were only further hurting the country’s economy. and hurt investors.

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