(MENAFN- Gulf Times) The Greek government said it can survive another week without defaulting on the International Monetary Fund as European officials warned the window for accessing aid is closing.
Greece will be able to scrape together enough cash to make a payment of about ‚¬300mn ($329mn) due to the IMF on June 5, Economy Minister George Stathakis said in an interview with Real News newspaper published yesterday.
"The country has been servicing its loans through internal resources for the past year," Stathakis said. "It will do the same this time."
Euro-region finance officials told Greece in a teleconference this week that there won't be time to get a disbursement approved by European parliaments before the bailout expires at the end of June unless they reach a technical agreement next week. With the clock ticking, European policy makers in the German city of Dresden for a Group of Seven meeting said a deal to unlock aid was still not in sight after months of negotiations.
"The red line is that there cannot be a deterioration of the overall budget situation, and in fact there needs to be an improvement," French Finance Minister Michel Sapin said in an interview with Bloomberg at the G-7 yesterday. Bailout talks "are progressing faster but not yet fast enough to conclude."
Five years after Europe and the IMF first rescued Greece, officials are once again trying to persuade officials in Athens to cut spending and raise taxes to justify handing over aid that can avert a debt default.
European stocks declined for a second day amid investor concern the payment will be missed. The Stoxx Europe 600 Index fell 1.7%. Greek 10-year bonds also lost ground, with their yield rising 13 basis points to 11.25%.
Still, the debt posted its first weekly gain since the end of April after occasional reports of progress in the talks. The yield climbed as high as 13.93% last month, the most since 2012.
Greece dominated public comments at the G-7 and muscled in on an agenda that was supposed to focus on economic growth, tax and financial architecture.
Negotiations between the Mediterranean nation and the institutions that led its bailout have stumbled over issues including Greek pensions, labour markets and budget.
"We are doing everything to meet this responsibility, but it's not only a responsibility for one country," German Finance Minister Wolfgang Schaeuble told reporters in Dresden.
US Treasury Secretary Jacob L Lew urged the Greek government to come up with a "credible plan" to unlock financing from its creditors and said that both sides needed to compromise.
Under IMF policy, Greece can bundle the four payments due next month and make them all together on June 19. IMF spokesman William Murray said on Thursday that Greece hasn't requested a bundling of payments.
The more pressing deadline for Greece may be the bureaucratic hurdles it still has to clear before it can get any money. Once officials from Greece and its creditors agree on an economic and financial plan, euro-area finance ministers need to sign off on the program and some parliaments, including Germany's, also have to provide their consent.
That could take almost a month, European officials warned in a conference call on Thursday, so Greece needs to nail down a technical deal next week or risk running out of time.
Euro-region finance ministers were told by their leaders to conclude negotiations in the next few days, Spanish newspaper El Mundo reported, citing a senior diplomat it didn't name with knowledge of the talks.
In a sign of mounting urgency, Greek Prime Minister Alexis Tsipras had a one-hour call with German Chancellor Angela Merkel and French President Francois Hollande on Thursday, according to a Greek government official.
European Commission President Jean-Claude Juncker said the dispute was discussed at Friday's European Union-Japan summit.
"This issue, which is a very difficult one, will be solved in the next coming days and weeks," he told reporters in Tokyo.
Greek government is confident of reaching a deal with its creditors this week and is open to pushing back parts of its anti-austerity programme to make that happen, the country's interior minister said yesterday.
"We believe that we can and we must have a solution and a deal within the week," Interior Minister Nikos Voutsis, who is not involved in Greece's talks with the lenders, told Skai television.
"Some parts of our programme could be pushed back by six months or maybe by a year, so that there is some balance," he said. He did not elaborate on what parts of the ruling Syriza party's anti-austerity programme could be pushed back, but the comments suggested a greater willingness to compromise on pre-election pledges.
The government earlier this week said it hoped for a deal by today, though international lenders have been less optimistic, citing Greece's resistance to labour and pension reforms that are conditions for more aid.
Voutsis said Athens and its partners agreed on some issues, such as achieving low primary budget surpluses in the first two years. But they still disagreed on a sales tax, with Greece pushing so any VAT hikes will not burden lower incomes.
"A powerful majority in the political negotiations has showed respect for the fact that there can't be further austerity strategies for the Greek issue, the Greek problem and the Greek people," he said.
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