Pressure on Greek government increases after Eurogroup

After Monday’s inconclusive Eurogroup in Brussels, the government has been forced, once again, to defer its deadline for a deal with the country’s international lenders.

With the April 7 Eurogroup in Malta now ruled out, government officials are hoping for a staff-level agreement before then, and a comprehensive deal by May.

Finance Minister Euclid Tsakalotos, his alternate, Giorgos Houliarakis, and Labor Minister Effie Achtsioglou will remain in Brussels as eurozone finance ministers Monday agreed to “intensify” talks – which will also include International Monetary Fund monitors – over the next few days in a bid to bridge the gap dividing Athens and its creditors, namely over labor and pension reforms.

But with huge debt repayments looming this summer, the government is under intensifying pressure to secure another loan tranche of its bailout program, as it becomes increasingly wary that it might plunge into a political crisis similar to that of 2015.

Officials in both Athens and eurozone capitals have voiced concern that further delays in reaching an overall deal will undermine any chances of the Greek economy recovering, as increasing uncertainty is keeping investors away from Greece.

With this in mind, Eurogroup chief Jeroen Dijsselbloem told reporters in Brussels Monday that it was time for “big decisions” that would open the way for a more comprehensive deal on Greece, that will include the IMF.

The Washington-based Fund’s participation in the Greek program is considered pivotal for its success. However, the government believes that the IMF will not clarify its role with regard to the Greek bailout before its spring meeting in Washington in late April.

Klaus Regling, the managing director of the euro area’s bailout fund, insisted Monday that a deal must be reached as soon as possible.

“A significant number of issues are not resolved yet and there’s a risk indeed that this could have a negative impact on the economy,” he said, warning consumer and investor confidence could be impacted negatively.

“The uncertainty about the conclusion of the review may be costly,” he said.

“The next big debt service payment is only due in July but it would be much better to conclude the review much before that.”