Greece and its international lenders did not come to an initial agreement after 10 hours of talks that concluded early Monday morning. Negotiations will resume at 3:00 in the afternoon.
The two sides are close to a compromise on several issues as the creditors negotiating team will leave Athens on Tuesday. The mission chiefs of the European Commission, European Central Bank, European Stability Mechanism and International Monetary Fund met with Economy Minister Giorgos Stathakis, Finance Minister Euclid Tsakalotos, Labor Minister Giorgos Katougalos and Bank of Greece Governor Yannis Stournaras.
Coming out of the meeting, the economy minister told reporters that there is still divergence on the selling of bad loans to distress funds and the protection of the primary residence from foreclosure. However, Greece’s central bank governor said that, “We are close.”
The finance minister said that there is still disagreement over the threshold of tax exempt incomes: Athens insists on 9,500 euros while creditors propose only incomes below 8,000 euros to be exempted.
On the issue of pensions, a source said that there is great divergence, with lenders insisting on deep cuts on supplementary pensions and Athens trying to protect them.
Athens hopes that two draft agreement texts will be written on Monday, before lenders depart. The two texts (one with European creditors and one with the IMF) will show that there is an agreement on the measures that need to be taken but they will differ in the Institutions estimate of their financial impact and the level of the primary surplus that is needed for 2018.
Athens and lenders have agreed to use a 3 percent primary surplus as the baseline scenario. However, EU and IMF still disagree on whether Athens could achieve a 3.5 percent primary surplus — budget balance before debt service payments — in 2018.
Greece is aiming for a compromise before April 22, the day of the scheduled meeting of euro zone finance ministers. A positive conclusion of the bailout program review will open the way for the discussion of Greece’s debt easing. But more importantly, it would unlock the disbursement of the next loan tranche.
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