Amid souring in relations, Greek and German leaders to meet

AP News
Posted: Mar 16, 2015 1:23 PM
Amid souring in relations, Greek and German leaders to meet

ATHENS, Greece (AP) — After a souring in relations between Germany and Greece over what Athens should do in exchange for rescue loans, Prime Minister Alexis Tsipras has accepted an invitation to meet German Chancellor Angela Merkel in Berlin next week, his office said Monday.

It will be his first visit since his Jan. 25 election to Germany — a major contributor to Greece's bailout that has insisted that Greece should stick to budget austerity measures if it wants to get more rescue loans.

Figures released Monday by the Greek central bank suggested the country needs the money. They showed the central government's cash balance was 684 million euros ($723 million) in deficit for the first two months of the year, compared with a surplus of 139 million euros in the same period of 2014. Excluding interest payments, the surplus fell to 503 million euros from 1.68 billion euros a year ago.

Tsipras' Syriza party came to power on a pledge to lighten the country's rescue loans. It also wants to ease the budget surplus targets demanded by the rescue creditors, arguing they are too high and hindering the economic recovery. The budget targets, which have involved spending cuts and tax increases, were meant to reduce debt but have also hurt the economy, putting it through a savage six-year recession.

Tsipras' government has convinced creditors to give it a four-month extension on the bailout program, but to get the money it must still detail a list of reforms by the end of April. If creditors do not approve the reforms, they will not unlock some 7 billion euros ($7.4 billion) remaining in the loan funds.

Greece on Monday repaid a loan worth some 584 million euros ($615 million) to the International Monetary Fund, a finance ministry official told the AP. But it faces a punishing repayment schedule though the summer, leaving it dependent on the bailout cash remainder.

Technical teams from the European Commission, European Central Bank and IMF — a group collectively known as the "troika," a term dropped from official use at Greek insistence — are in Athens to review Greek proposals.

However, they have been banned from entering ministry buildings, as the new government wants to avoid domestically damaging echoes of previous years, when visiting bailout inspectors were perceived as lording it over Greek officials. Instead, they will be provided with requested data on neutral ground.

"I won't hide from you that there are very many difficulties in the ongoing negotiations," Tsipras said in an interview with the Athens daily Ethnos. "There still are voices of intransigence ... The key to reaching an honorable compromise is the recognition that the previous policy of extreme austerity has failed."

Tsipras renewed government assurances that state salaries and pensions would not be affected by the tough ongoing negotiations with bailout creditors.

Christian Schulz, a senior economist at Berenberg Bank, said the eurozone was unlikely to give in to Greek demands on the reforms measures.

"Greece and the eurozone remain in different story lines," he said. "While the eurozone thinks it has given Greece time to implement the necessary reforms to secure funding, the Greek government seems to think it has been given time to negotiate a new grand bargain with the eurozone."

In Brussels, EU Commission spokesman Margaritis Schinas described Greece's situation as "serious."

"There are technical discussions underway, including discussions being held in Athens. The commission feels that right now, it's time to work, not make statements."

Uncertainty over Greece weighed on shares on the Athens Stock Exchange, which closed nearly 1 percent lower despite gains across Europe.


Online: Bank of Greece figures:


AP writer Nicholas Paphitis in Athens contributed to this report.


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