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Tags: greece | debt | negotiations

IMF Abandons Talks, Tells Greece To Decide on Deal

Thursday, 11 June 2015 12:34 PM EDT

European Union President Donald Tusk told Greece’s Alexis Tsipras to stop maneuvering and decide whether to accept the conditions on financial aid as the International Monetary Fund’s negotiators left Brussels empty-handed.

The IMF said that its team flew out after failing to make progress on a debt deal that would help Greece avoid default and cement its position within the euro. Tusk accused Greece of playing games with its future and pressed Tsipras to make concessions to escape economic ruin.

“We need decisions, not negotiations now,” Tusk told reporters in Brussels on Thursday. “There is no more space for gambling, there is no more time for gambling. The day is coming I am afraid that someone says the game is over.”

Tusk abandoned his neutral position as a broker of EU compromises to signal Greece’s creditors are preparing to hand Tsipras an ultimatum. The creditors have grown exasperated with the Greek leader’s refusal to bow to their demands, risking a default and ultimately an exit from the currency bloc, with potential consequences beyond the country’s borders.

“The ball is very much in Greece’s court,” IMF spokesman Gerry Rice told reporters at a media briefing in Washington. “There are major differences between us in most key areas. There has been no progress in narrowing these differences recently.”

Markets Surge

German Chancellor Angela Merkel, who held talks with Tsipras and French President Francois Hollande late Wednesday, also signaled that the Greek side still has to budge.

“The willingness is there to cooperate with the three institutions,” Merkel said, referring to the European Commission, the IMF and the European Central Bank.

“It’s now a matter of acting on that,” she said, arriving for a summit of European and Latin American leaders in Brussels earlier on Thursday.

The prevailing market sentiment remained upbeat amid optimism that a deal will be brokered. Greek stocks surged, with the Athens Stock Exchange index up 8.2 percent for its biggest gain since Feb. 24, when Greece and creditors agreed on a four- month bailout extension. Greek bonds also rose, with the yield on 2017 notes falling 155 basis points to 24.67 percent.

Creditors’ Proposal

Merkel and Hollande gathered ECB President Mario Draghi, IMF chief Christine Lagarde along with European Commission President Jean-Claude Juncker in Berlin on June 1 to thrash out a proposal for Greece. The plan was initially billed as a final offer though Juncker subsequently rowed back on that.

Greece put forward a counter-proposal that was dismissed as not credible by one official involved in the process.

Creditors have previously given June 14 as the deadline for an accord if it is to be approved by national parliaments before the bailout expires at the end of June. Tusk moved that back further, saying the next meeting of euro-area finance ministers on June 18 would be “very crucial.”

That meeting “should be decisive, because we have no more time, I am absolutely sure,” Tusk said.

Unemployment Jumps

Tsipras will have to weigh an accord that would be acceptable to parliament in Athens as economic conditions are worsening in Europe’s most indebted nation. The unemployment rate in Greece rose to 26.6 percent in the first quarter, up from 26.1 percent in the preceding three months, according to an e-mailed statement from the Hellenic Statistical Authority.

Still, after five years of austerity, some Greeks are set against accepting further demands. In a Marc survey of 1,001 people conducted this week, 50 percent of respondents said Greece should accept the creditors’ demands while 37 percent said the prime minister should stand firm.

On the outside of the finance ministry in the center of Athens, the communist union PAME hung a five-story-high banner on Thursday. It pictured Tsipras alongside his predecessors George Papandreou and Antonis Samaras and three sinister figures with top hats and cigars, blaming them for accepting the demands of Greece’s creditors.

“We’ve bled enough, we’ve paid enough,” the banner said. “Give the issue back to the people, block the new measures, stop permanent memorandums.”

Rice said that the IMF is still looking for Greece to cut pensions, simplify its sales tax system, and improve tax collection overall. The IMF judges the government could increase its revenue by 1 percent of gross domestic product with those changes, he said.

A Greek deal is “practically and technically” possible by the June 18 meeting, Eurogroup President Jeroen Dijsselbloem told reporters. “Whether it’s politically possible, I don’t know,” he said.

© Copyright 2023 Bloomberg News. All rights reserved.

European Union President Donald Tusk told Greece's Alexis Tsipras to stop maneuvering and decide whether to accept the conditions on financial aid as the International Monetary Fund's negotiators left Brussels empty-handed. The IMF said that its team flew out after failing...
greece, debt, negotiations
Thursday, 11 June 2015 12:34 PM
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