Gov’t, lenders edge closer to deal but IMF has new demands

It remained unclear late on Thursday night when dragging bailout negotiations might be completed and inspectors might return to Athens as Greek and foreign officials remained at loggerheads over key issues including pensions and labor market reforms.

Representatives of the International Monetary Fund told Kathimerini yesterday that envoys would not return to Greece until a deal is within sight.

According to sources, the key sticking points in talks – which appeared to have been all but wrapped up early this week – are calls by the IMF for further cuts to pensions.

It seems that this demand was what scuppered the deal-in-the-making, along with the Fund’s insistence that economic measures slated for implementation in 2020 be brought forward to 2019; there are concerns at the Fund that general elections scheduled to take place in Greece in 2019 could bring in a new government that may refuse to honor reforms agreed to by the current administration.

On the other contentious issue of labor reforms, the IMF is said to have shown some flexibility, indicating that the matter can be shelved until agreement has been reached on all the other areas.

What appears to be the likeliest scenario at this stage, sources suggested, is that the framework for an agreement could be presented at the next scheduled Eurogroup meeting on April 7. This would allow officials to draft all the measures that Greek MPs must legislate by the next scheduled Eurogroup on May 22 when the IMF is expected to indicate whether it will join Greece’s third international bailout.

So far, what the two sides have managed to agree on is to reduce the tax-free threshold to 5,900 euros from the current 8,636 euros and to trim the pensions of some 900,000 retirees as Finance Minister Euclid Tsakalotos confirmed in a meeting with MPs of Independent Greeks (ANEL) on Thursday.

However, as the government tries to edge closer to a deal, it has become increasingly obvious that its greatest obstacle is overcoming dissent from within its ranks.

With a deal on pension cuts and a tax threshold for the most part agreed, the leftist-led coalition is now faced with resistance by SYRIZA lawmakers, who say it has betrayed its principles in its desperate effort to clinch a deal.

And in its attempt to save face, the goverment is pushing for an agreement on labor reform which it hopes would adhere to its leftist outlook.

For this reason, it is looking for a strong message of support from the director-general of the International Labor Organization (ILO), Guy Ryder, who will meet with Tsipras on Friday.

More specifically, the government wants the ILO to acknowledge that it has already done more than enough on the front of labor reform and that Greece should not be forced to implement measures that will send it back to “the Middle Ages.”