More work needed to conclude Greek bailout review talks: EU's Moscovici

ATHENS/BERLIN (Reuters) - Greece’s talks with its official lenders on concluding a crucial bailout review have made progress, but more steps are needed to wrap it up, European Commissioner for Economic and Financial Affairs Pierre Moscovici said on Wednesday.

Greek Prime Minister Alexis Tsipras (L) welcomes European Economic and Financial Affairs Commissioner Pierre Moscovici at the Maximos Mansion in Athens, Greece February 15, 2017. REUTERS/Alkis Konstantinidis

Moscovici visited Athens to help bridge differences between Greece, Berlin and the International Monetary Fund over the country’s fiscal targets, the possibility of further debt relief and reforms as part of the review that has dragged on for months, rekindling fears of a new financial crisis in Europe.

“There is convergence at certain points so that we can conclude the review and move ahead,” Moscovici told reporters before a meeting with Greek Finance Minister Euclid Tsakalotos. “Some more small steps remain.”

Athens hopes for a “political” deal by Feb. 20, when the Eurogroup, the euro zone’s finance ministers, will discuss the Greek issue in Brussels.

Moscovici told Greek Prime Minister Alexis Tsipras that the Eurogroup meeting could set the parameters of an agreement to conclude the review but effort was required from all sides.

An initial agreement would allow the lenders’ mission chiefs to return to Athens and agree the reforms which Greece needs to adopt before its lenders sign off on the review.

The delays have revived memories of a standoff between Tsipras and the lenders in 2015 that almost forced Greece out of the euro zone. After months of tense talks, Tsipras signed up in July 2015 to a new bailout in return for austerity measures.

“We are going to discuss on and on until Monday ... to bring everybody on board, so that everybody feels comfortable with the parameters of what could be a compromise,” said Moscovici adding that any agreement would need to include the IMF. [A8N1EA010]

Although Moscovici said that he was not in Athens to negotiate and that any decision would be taken by the Eurogroup with the country’s lenders attending, he said Athens had to make counterproposals to reach a compromise.

“I told Mr. Tsipras that it’s up to him to now think of it and make also the counterproposals that can be necessary... This is a discussion which will last until Monday,” he told Skai TV.

Greece, aiming to return to bond markets this year, wants to be included in the European Central Bank’s bond-buying program by March. But Greek Energy Minister George Stathakis said on Wednesday that plan “would be postponed for a while”.


The EU says Athens can outperform its target of a primary surplus - which excludes debt servicing costs - of 3.5 percent of gross domestic product in 2018, when its bailout expires.

The IMF, which has yet to decide if it will fund the Greek program, says the mix of measures in the bailout can only yield a surplus of 1.5 percent of GDP in 2018 unless Athens adopts more austerity and is granted significant debt relief.

The higher the surplus and the longer it is maintained, the less the need for any further debt relief for Greece.

EU officials have called IMF projections “pessimistic”. Germany, Europe’s paymaster, says Greece does not need further debt relief but does need more reforms to improve its competitiveness.

Berlin wants the IMF to join the program, as it gears for national elections. It believes the fund can add credibility to the Greek bailout, the country’s third rescue plan since 2010.

But Poul Thomsen, director of the IMF’s European department, told German newspaper Handelsblatt that the IMF’s view on the Greek economy had not changed.

“Accusations that we have outdated models and that we are permanently too pessimistic, goes against the fact that the Greek program has missed targets for years now,” Thomsen said.

With national elections looming across Europe, time is shrinking for Athens and its lenders to cobble together a deal that will stave off a Greek default on loan repayments in July.

Tsakalotos, who met with EU and IMF officials last week in an effort to break the impasse, urged the IMF to make a decision on its participation on Wednesday.

“If the IMF wants to cooperate, it should make a quick decision and stop making unreasonable demands,” he wrote in an opinion piece in the German newspaper Bild.

Euro zone officials said on Friday the lenders would ask Greece to adopt new measures worth 2 percent of GDP, focused on broadening the tax base and on pension cutbacks.

Tsipras told Moscovici that it would be destructive to discuss more austerity measures and that an “alliance of logic” was needed to wrap up the review. Greece has cut pensions 11 times since the debt crisis broke out.

“The message is: Enough with austerity in Greece,” he said.

Additional reporting by George Georgiopoulos, Angeliki Koutantou and Lefteris Papadimas, editing by Larry King