Gov’t jittery amid lack of prospects for a debt deal

With the next Eurogroup only two weeks away, the government appears to be the verge of a nervous breakdown as there are no signs that Berlin and the International Monetary Fund are any closer to an agreement leading to a “comprehensive deal” that will include debt relief – a key objective of Prime Minister Alexis Tsipras.

Speaking to a meeting of Greek industrialists on Wednesday, Tsipras upped the ante with the country’s foreign creditors, calling on them to live up to their responsibilities. He also warned he won’t accept any solution that does not secure the country’s entry to international markets.

However, European officials have told Kathimerini that the proposal on the table at the previous meeting of eurozone finance ministers is not expected to change at the next Eurogroup on June 15.

This also means that talks on what debt relief measures Greece should expect will also be deferred to a later date. This will essentially dismantle the government’s narrative stipulating that debt relief will pave the way for the country to return to international markets.

The narrative received a further blow from German Finance Minister Wolfgang Schaeuble, who insists that Greece still has hurdles to clear before entering international markets.

The need for clear decisions on Greece’s debt was highlighted by both Finance Minister Euclid Tsakalotos and Bank of Greece Governor Yannis Stournaras at Wednesday’s Economist Conference in Frankfurt, Germany.

Tsakalotos said that Greece had fulfilled its commitments to its international creditors, so it is crucial there is clarity on the issue for Greek citizens and investors, who want to know how the country will service its debt.

Stournaras raised the alarm, saying Greece simply cannot afford another year of uncertainty over whether it will get debt relief. “The markets need clarity,” he said.

But the European Stability Mechanism (ESM) mission chief to Greece, Nicola Giammarioli, raised the bar concerning debt relief at the next Eurogroup, saying that “debt sustainability is an important topic. But it would be far better if the discussion was about what Greece is doing to implement the ESM program.”

“The excessive focus on debt relief distracts from what really needs to happen: full program ownership and swift implementation of the program by Greece,” he told the conference.