Germany on Wednesday cast doubt on a hurriedly-concluded Greek bailout deal which Prime Minister Alexis Tsipras said should promptly unlock default-saving funds for his debt-crippled country.
Greece and its creditors reached a technical agreement on a third international bailout after marathon talks in the early hours of Tuesday morning but the deal must still be approved by eurozone member states.
But Germany, the effective paymaster of European bailouts, has expressed caution over the proposal.
"We have formulated questions," Wolfgang Schaeuble's finance ministry said in a statement. "These are part of the review process which is not yet completed."
As eurozone ministers prepared to examine the accord in Brussels on Friday, Tsipras said he was confident the 400-page document -- set for a parliamentary vote in Athens late on Thursday night -- would be approved.
"I am and remain confident that we will succeed in reaching a deal and loan support ... that will end economic uncertainty," he said.
But in an apparent swipe at Germany, the 41-year-old premier said certain EU states had a "hidden plan to reshape the eurozone, using Greece as the excuse."
"Greece will not give them the excuse," he said.
Top-selling Bild newspaper cited a two-page German finance ministry document that raised questions about Greece's debt sustainability, the role of the International Monetary Fund and on privatisations.
Berlin is also unhappy about Greece's annual budget targets being scaled back, Bild said.
Greece and its creditors are under pressure to finalise the 85-billion-euro deal by August 20 when Athens must repay some 3.4 billion euros ($3.8 billion) to the European Central Bank.
A Greek government source said Tsipras had called an emergency session of parliament for Thursday for a crucial vote on ratifying the deal.
Eurozone finance ministers will then meet Friday to give their verdict on the deal, Eurogroup President Jeroen Dijsselbloem's spokesman said on Twitter.
- Tumbling into recession -
Separately, EU sources said Greece will tumble back into deep recession this year.
The Greek economy, which crawled out of a six-year recession only in 2014, will shrink 2.3 percent in 2015 and another 1.3 percent in 2016, they said.
Growth should then return, running at 2.7 percent in 2017 and 3.1 percent in 2018, they said.
Greece has repeatedly complained that the austerity measures demanded by its creditors -- the EU, the ECB and the International Monetary Fund -- in return for two previous bailouts have only hurt an economy that has contracted by a quarter since the crisis broke.
The latest rescue package calls for a gas market overhaul, ends most early retirement schemes, eliminates fuel price benefits for farmers and raises some taxes, among other measures.
The government said Greek banks -- which were forced to shut down for three weeks as panicked customers withdrew billions of euros -- would immediately receive 10 billion euros from the package, and will be fully recapitalised by the end of the year.
The draft deal comes after months of acrimonious negotiations between the creditors and Greece's left-wing government, which took power in January.
Investors reacted with relief to news of the outline deal, with shares in Athens closing Tuesday 2.14 percent higher for a fourth straight day of gains.
But the positive run ended on Wednesday with the ATHEX index closing 1.93 percent down.
- Still no certainty -
An EU source said it was unclear if the bailout would be finalised by the August 20 deadline -- leaving open the possibility that Athens might need a few days of emergency funding.
"In that case, we need all the member states" to approve such a loan, the source added, in what could pose a fresh headache for negotiators.
Finnish Finance Minister Alexander Stubb -- one of the hardliners on the bailout accord -- told AFP that Helsinki would carefully scrutinise all the details.
Tsipras is under pressure from hardliners in his radical left Syriza party who say the new accord will pile further austerity on a weakened economy and goes against the party's campaign pledges. He suffered a major mutiny by Syriza members in two previous votes on the bailout.
The embattled prime minister has warned that he may be forced to call early elections if the dissent continues.
An analyst at Capital Economics urged caution.
"While Greece appears finally to be on the verge of receiving a third bailout, the extremely optimistic economic and fiscal projections underlying the plan suggest that it might not last for very long," he said.
Tsipras' former finance minister Yanis Varoufakis concurred.
"Ask anyone who knows anything about Greece's finances and they will tell you this deal is not going to work," he told the BBC's World at One.
Greece on Wednesday also raised 1.138 billion euros in three-month treasury bills at a steady interest rate of 2.7 percent.
Germany on Wednesday cast doubt on a hurriedly-concluded Greek bailout deal which Prime Minister Alexis Tsipras said should promptly unlock default-saving funds for his debt-crippled country.
Greece and its creditors reached a technical agreement on a third international bailout after marathon talks in the early hours of Tuesday morning but the deal must still be approved by eurozone member states.
But Germany, the effective paymaster of European bailouts, has expressed caution over the proposal.
“We have formulated questions,” Wolfgang Schaeuble’s finance ministry said in a statement. “These are part of the review process which is not yet completed.”
As eurozone ministers prepared to examine the accord in Brussels on Friday, Tsipras said he was confident the 400-page document — set for a parliamentary vote in Athens late on Thursday night — would be approved.
“I am and remain confident that we will succeed in reaching a deal and loan support … that will end economic uncertainty,” he said.
But in an apparent swipe at Germany, the 41-year-old premier said certain EU states had a “hidden plan to reshape the eurozone, using Greece as the excuse.”
“Greece will not give them the excuse,” he said.
Top-selling Bild newspaper cited a two-page German finance ministry document that raised questions about Greece’s debt sustainability, the role of the International Monetary Fund and on privatisations.
Berlin is also unhappy about Greece’s annual budget targets being scaled back, Bild said.
Greece and its creditors are under pressure to finalise the 85-billion-euro deal by August 20 when Athens must repay some 3.4 billion euros ($3.8 billion) to the European Central Bank.
A Greek government source said Tsipras had called an emergency session of parliament for Thursday for a crucial vote on ratifying the deal.
Eurozone finance ministers will then meet Friday to give their verdict on the deal, Eurogroup President Jeroen Dijsselbloem’s spokesman said on Twitter.
– Tumbling into recession –
Separately, EU sources said Greece will tumble back into deep recession this year.
The Greek economy, which crawled out of a six-year recession only in 2014, will shrink 2.3 percent in 2015 and another 1.3 percent in 2016, they said.
Growth should then return, running at 2.7 percent in 2017 and 3.1 percent in 2018, they said.
Greece has repeatedly complained that the austerity measures demanded by its creditors — the EU, the ECB and the International Monetary Fund — in return for two previous bailouts have only hurt an economy that has contracted by a quarter since the crisis broke.
The latest rescue package calls for a gas market overhaul, ends most early retirement schemes, eliminates fuel price benefits for farmers and raises some taxes, among other measures.
The government said Greek banks — which were forced to shut down for three weeks as panicked customers withdrew billions of euros — would immediately receive 10 billion euros from the package, and will be fully recapitalised by the end of the year.
The draft deal comes after months of acrimonious negotiations between the creditors and Greece’s left-wing government, which took power in January.
Investors reacted with relief to news of the outline deal, with shares in Athens closing Tuesday 2.14 percent higher for a fourth straight day of gains.
But the positive run ended on Wednesday with the ATHEX index closing 1.93 percent down.
– Still no certainty –
An EU source said it was unclear if the bailout would be finalised by the August 20 deadline — leaving open the possibility that Athens might need a few days of emergency funding.
“In that case, we need all the member states” to approve such a loan, the source added, in what could pose a fresh headache for negotiators.
Finnish Finance Minister Alexander Stubb — one of the hardliners on the bailout accord — told AFP that Helsinki would carefully scrutinise all the details.
Tsipras is under pressure from hardliners in his radical left Syriza party who say the new accord will pile further austerity on a weakened economy and goes against the party’s campaign pledges. He suffered a major mutiny by Syriza members in two previous votes on the bailout.
The embattled prime minister has warned that he may be forced to call early elections if the dissent continues.
An analyst at Capital Economics urged caution.
“While Greece appears finally to be on the verge of receiving a third bailout, the extremely optimistic economic and fiscal projections underlying the plan suggest that it might not last for very long,” he said.
Tsipras’ former finance minister Yanis Varoufakis concurred.
“Ask anyone who knows anything about Greece’s finances and they will tell you this deal is not going to work,” he told the BBC’s World at One.
Greece on Wednesday also raised 1.138 billion euros in three-month treasury bills at a steady interest rate of 2.7 percent.
