ATHENS — Greek Finance Minister Yanis Varoufakis said May 18 that he expects an agreement with bailout creditors within the next week, which would save the cash-strapped country from fast-approaching bankruptcy.
“I think we are very close,” Varoufakis said. “Let’s say (it’s a matter) of about a week.”
For almost four months, Greece’s radical left-led government has been haggling with its creditors from the 19-country Eurozone and International Monetary Fund over economic reforms it must make to secure a 7.2 billion euro ($8 billion) cash injection.
That is the final payment due from the country’s 240 billion-euro bailout program, launched five years ago after Greece’s public finances spiraled out of control and it was locked out of international bond markets.
In a late-night interview with private Star TV, Varoufakis said creditors also appear to believe that the time is ripe for a deal. But he insisted that he would reject any compromise that the radical left-led government in Athens considers to be “non-viable.”
Earlier, Prime Minister Alexis Tsipras said the country has tabled detailed proposals for a viable deal. But he warned that Greece is in a state of “financial strangulation.”
Over the past few weeks, Greece has survived by scraping together cash from reserve accounts to pay debts as well as day-to-day commitments like wages and pensions.
However, Athens admits it is running out of options as further debt repayments come due next month. If no deal is agreed, Tsipras’ government may be faced with a choice of what to pay, imposing capital controls or even leaving the euro.
“I assure you that if we face a dilemma between paying a creditor who refuses to sign an agreement with us and a pensioner, we will pay the pensioner,” Varoufakis said. “I hope we will be able to pay both.”
Tsipras also faulted Greece’s creditors for the liquidity crunch.
“The lack of liquidity is neither the choice nor the responsibility of the Greek government,” he said. “It is a tough negotiating tactic of our partners, and I do not know whether everybody in Europe feels proud of it.”
Government spokesman Gabriel Sakellaridis said that to honor its debt obligations this summer, Greece needs more financial assistance. As a result, Sakellaridis expects a deal with creditors “by the end of May.”
Markets appear to be uncertain about how the latest episode in the Greek debt crisis will pan out. Though uncertainty over Greece caused the interest rate on the government’s two-year bonds — a gauge of default risk — surge about 3 percentage points on May 18 to above 24 percent, the Athens Stock Exchange closed 1.6 percent higher.
In the talks, Athens is proposing reform measures that might protect Greeks hammered by a six-year recession, but lenders say the proposals are too vague.
Varoufakis said the main sticking points include demanded pension and labor reforms, as well as the height of the primary budget surplus — which excludes the cost of servicing Greece’s huge debt — in coming years.
Government officials have suggested that Athens could seek popular approval for the final deal, through elections or a referendum. But Varoufakis said he didn’t expect either, and the agreement would be ratified in parliament.
He said it would be “foolish” to hold elections just months after the government came to power, adding that any referendum would effectively be a vote on whether to keep or lose the euro currency.
“And it would be unfair for Greek citizens to have to take a position on such a matter, answering with either a yes or a no,” Varoufakis said.
Athens has already pooled cash reserves from schools, hospitals and local government to fund the state’s debt payments. And Sakellaridis confirmed the government this month used a reserve account with money in a currency unit used by the IMF to repay a loan to the Fund.
Sakellaridis also insisted Greece would not accept a one-off bank deposit levy to resolve the cash crisis — a similar measure had been used in Eurozone member Cyprus two years ago.
(DEREK GATOPOULOS and NICHOLAS PAPHITIS)