German Chancellor Angela Merkel said on Thursday everything must be done to prevent Greece running out of money before it reaches a deal with its international creditors, amid concern that Greek state coffers are empty.
Merkel had a meeting with Greek Prime Minister Alexis Tsipras on the sidelines of the European Union summit in Brussels. The two leaders discussed the Greek debt issue and the ongoing negotiations between Athens and lenders. Tsipras has asked for a political solution to the Greek problem. The German chancellor asked for confidentiality about the content of the discussion.
Coming out of the talk with the Greek premier, Merkel said that the meeting was “constructive.” Later, at a press conference, when asked by reporters what would happen if Greece runs out of money before any agreement with creditors is reached, she said, “Everything must be undertaken to prevent that.”
On his part, Tsipras sounded optimistic saying that there is progress in negotiations and that would unlock funds. “We have covered a large part of the distance,” he said.
However, EU officials warned the Greek side to curb optimism because there are still a lot of differences over reforms on the negotiating table and the two sides are far from an agreement. Greece disagrees on reforms in labor market, pension system, value added tax and state finances.
The lenders’ technical team and their Greek counterparts are far from reaching a staff level agreement that will lead to an official agreement. They estimate that an agreement cannot be reached before June. Greece, however, is hoping for a partial agreement that would release partial bailout funds.
The Greek government has resorted to internal borrowing to meet immediate financial needs. Through a legislative act, Athens has tapped reserves from security and municipality funds amid strong reactions from mayors and the political opposition.
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