June 22, 2015

Greece might be close to a Debt Deal with the EU

The euro edged higher against the U.S. dollar, yen and Swiss franc on Monday as a new cash-for-reforms offer from Greece raised hopes a tangible deal is taking shape that will help Athens avoid a default on its debts.

Euro zone finance ministers left a meeting with Greek officials in Brussels voicing optimism at Greece's offer, with talk of more work ahead to achieve a potential deal this week.

Greece will default if it does not repay a €1.6bn (£1.1bn) IMF loan by the end of the month.

If that happens, it risks crashing out of the single currency and possibly the EU.

Eurozone leaders are currently discussing Greece's proposals at an emergency summit in Brussels

Greece's economy minister Giorgios Stathakis told BBC News Robert Preston that his Syriza government, led by Alexis Tsipras, had avoided crossing its red lines with the new proposals.

So, he said, there would be no further reductions in pensions or public-sector wages. And there would be no increase in VAT on electricity.

He also said that the government had agreed with the IMF and eurozone governments that the targeted budget surplus would be 1% of GDP or national income this year, 2% next year and 3% the year after.

There will be no agreement with creditors to cut Greece's massive burden of debt, despite Syriza's earlier insistence on this. But Mr Stathakis told me he expects eurozone government heads to issue a communique later saying that debt relief will be on the agenda for negotiation in coming months.

Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock the final €7.2bn tranche of bailout funds until Greece agrees to economic reforms.

SOURCES - Reuter, BBC News

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