Greece, Creditors Talks to Resume, But Deal on May 9 Eurogroup Unlikely

Tsakalotos_DijsselbloemGreece’s bailout negotiations with international creditors are to resume by teleconference on Tuesday, ahead of the extraordinary Eurogroup on May 9.

According to Greek media, it is unlikely that much ground will be covered until the May 9 meeting of Eurozone Finance Ministers in Brussels. Creditors insist on the proposed contingency measures and reject the Greek proposal for a mechanism that would automatically cut state spending if Athens misses the fiscal targets set.

Thereby, it is most likely that another Eurogroup will be needed to iron out details and seal the agreement. This will delay further the disbursement of the next loan tranche that Athens needs to meet financial obligations until July.

On Tuesday, the European Commission’s statistical authority, Eurostat, is to publish its predictions for 2016 and 2017. On Wednesday, it is likely that Eurogroup President Jeroen Dijsselbloem will meet with Greek Finance Minister Euclid Tsakalotos, German Finance Minister Wolfgang Schaeuble and French Finance Minister Michel Sapin to lay the groundwork for next Monday’s Eurogroup.

Tsakalotos will fight to avoid the 3.6-billion-euro contingency measures that the International Monetary Fund (IMF) wants Greece to commit to taking in 2018 if it misses budget targets. The Greek Finance Minister will insist that it is unconstitutional to legislate in advance measures that might not be taken in the end.

However, Greek media reported that it is likely that the government would back down at the last minute since Athens is unlikely to be able to meet its financial obligations unless it receives the next 5.7-billion-euro bailout tranche.