Talks between Greece and its creditors ended with no breakthrough Friday as months of feuding with the International Monetary Fund raised fears of a new debt crisis.
Greece is caught up in a complicated row with its eurozone paymasters and the IMF over debt relief and budget targets that has rattled markets and revived talk of the country's place in the euro.
Eurogroup chief Jeroen Dijsselbloem said progress was made after five hours of talks in Brussels with Greek Finance Minister Euclid Tsakalotos and other EU and IMF officials, but provided few details.
"There is a clear understanding that a timely finalisation of the second review is in everyone's interest," Dijsselbloem said in a short statement, referring to the long delayed signing off on the next payment of bailout loans.
The Greek government faces debt repayments of 7.0 billion euros ($7.44 billion) this summer that it cannot afford without defusing the months-long feud that is holding up new loans from Greece's 86 billion euro bailout.
Breaking the stalemate in the coming weeks was seen as paramount with elections in the Netherlands on March 15 and France in April through June threatening to make a resolution even more difficult.
But Dijsselbloem also warned that the next meeting of eurozone ministers on February 20 -- seen as an unofficial deadline ahead of the votes -- would still be too early for a breakthrough.
"We will take stock of the further progress (during that meeting)", said Dijsselbloem, who is also Dutch finance minister.
The central focus of the talks was whether Greece can deliver a primary balance, or a budget surplus before debt repayments, equal to 3.5 percent of GDP for several years after the completion of the current bailout in 2018.
- Overly optimistic calculations? -
That is far higher than the 1.5 percent that the IMF says is feasible. The fund insists that attaining 3.5 percent would require a fresh round of reform commitments that Athens is baulking at.
The IMF accuses Athens and Europe of relying on overly optimistic calculations in an effort to rule out major debt relief, which powerful Germany is firmly opposed to.
The IMF this week warned in a report that Greece's debt projection was "explosive" and its growth prospects uncertain.
The differences have delayed the next bailout payment, angering Athens, even though the leftist government backs the IMF call for strong debt relief.
Earlier this week, Tsakalotos said the IMF's pessimistic forecast for the Greek economy "fails to do justice" to the sacrifices made by Greece by underestimating growth and progress made.
But the IMF managing director Christine Lagarde defended the report, saying the review of the Greek economy "tried in full honesty to be ... ruthless truth tellers" despite the criticism.
The report highlighted that despite a "massive effort" by the Greek people, some of the reforms are incomplete, including changes to the pension and income tax systems, where too few people bear most of the tax burden, Lagarde said.
The quarrelling has spooked investors with Greece's two year borrowing rates soaring to near 10 percent this week on the financial markets.
Talks between Greece and its creditors ended with no breakthrough Friday as months of feuding with the International Monetary Fund raised fears of a new debt crisis.
Greece is caught up in a complicated row with its eurozone paymasters and the IMF over debt relief and budget targets that has rattled markets and revived talk of the country’s place in the euro.
Eurogroup chief Jeroen Dijsselbloem said progress was made after five hours of talks in Brussels with Greek Finance Minister Euclid Tsakalotos and other EU and IMF officials, but provided few details.
“There is a clear understanding that a timely finalisation of the second review is in everyone’s interest,” Dijsselbloem said in a short statement, referring to the long delayed signing off on the next payment of bailout loans.
The Greek government faces debt repayments of 7.0 billion euros ($7.44 billion) this summer that it cannot afford without defusing the months-long feud that is holding up new loans from Greece’s 86 billion euro bailout.
Breaking the stalemate in the coming weeks was seen as paramount with elections in the Netherlands on March 15 and France in April through June threatening to make a resolution even more difficult.
But Dijsselbloem also warned that the next meeting of eurozone ministers on February 20 — seen as an unofficial deadline ahead of the votes — would still be too early for a breakthrough.
“We will take stock of the further progress (during that meeting)”, said Dijsselbloem, who is also Dutch finance minister.
The central focus of the talks was whether Greece can deliver a primary balance, or a budget surplus before debt repayments, equal to 3.5 percent of GDP for several years after the completion of the current bailout in 2018.
– Overly optimistic calculations? –
That is far higher than the 1.5 percent that the IMF says is feasible. The fund insists that attaining 3.5 percent would require a fresh round of reform commitments that Athens is baulking at.
The IMF accuses Athens and Europe of relying on overly optimistic calculations in an effort to rule out major debt relief, which powerful Germany is firmly opposed to.
The IMF this week warned in a report that Greece’s debt projection was “explosive” and its growth prospects uncertain.
The differences have delayed the next bailout payment, angering Athens, even though the leftist government backs the IMF call for strong debt relief.
Earlier this week, Tsakalotos said the IMF’s pessimistic forecast for the Greek economy “fails to do justice” to the sacrifices made by Greece by underestimating growth and progress made.
But the IMF managing director Christine Lagarde defended the report, saying the review of the Greek economy “tried in full honesty to be … ruthless truth tellers” despite the criticism.
The report highlighted that despite a “massive effort” by the Greek people, some of the reforms are incomplete, including changes to the pension and income tax systems, where too few people bear most of the tax burden, Lagarde said.
The quarrelling has spooked investors with Greece’s two year borrowing rates soaring to near 10 percent this week on the financial markets.
