German Finance Minister Wolfgang Schaeuble doused expectations of a positive outcome for Greece at an emergency meeting with its official creditors tomorrow, saying there are no plans to give the country more time.
Speaking to reporters in Istanbul after a two-day meeting of finance chiefs from the Group of 20, Schaeuble said “it’s over” if Greece doesn’t want the final tranche of the current aid program. Greece’s creditors also “can’t negotiate about something new,” Schaeuble said.
Greek government bonds had risen today for the first time in five days on optimism there might be room to move toward an agreement that will help ensure the nation isn’t left short of funds. That had come after Greece had offered compromises in a bid to push for a bridge plan to stave off a funding crunch and to buy time for negotiations to ease austerity demands.
Any accord, however, would require an easing of Germany’s stance in the standoff between Greece and its creditors over conditions attached to its 240 billion-euro (US$272 billion) lifeline. An impasse risks leaving Greece without funding as of the end of this month, when its current bailout expires, and may put Europe’s most-indebted state’s euro membership in danger.
Schaeuble damped expectations, saying euro region finance ministers meeting in Brussels tomorrow won’t negotiate a new program for the cash-strapped country, as a program is already in place and was arrived at after “arduous” negotiations.
He also said media reports that the European Commission will give Greece six more months to reach an aid deal “has to be wrong” because he’s not aware of such a plan and the commission isn’t in charge of making such decisions. Schaeuble said he had discussed the rules of the aid programs at a meeting with his Greek counterpart Yanis Varoufakis in Berlin last week.
Greece’s three-year bond yield fell 157 basis points, or 1.57 percentage points, to 19.51 percent at 4:51 p.m. London time. The Athens Stock Exchange Index rose 8 percent today, its biggest jump in a week.
Varoufakis told lawmakers on Monday that the government intends to neither tear up the existing bailout agreement, nor allow the budget to be derailed. He said Greece will implement about 70 percent of reforms already included in the current bailout accord.
“The Greek side entered the negotiations very powerfully and very soon realized that things are worse than they expected, as they faced a concrete wall,” said Aristides Hatzis, an associate professor of law and economics at the University of Athens. “A U-turn began very quickly. Varoufakis slowly started pouring more water in his wine.”
Greece is seeking to drum up support for a 10 billion-euro ($11.3 billion) bridge plan ahead of the euro-area finance ministers’ meeting in Brussels on Wednesday.
Varoufakis’s proposal will ask for an 8 billion-euro increase in the stock of Treasury bills the country is allowed, said a government official who asked not to be named because the negotiations are confidential. He will also seek the disbursement of 1.9 billion euros of profits that euro area-central banks made on their Greek bonds holdings.
Greece is pushing for a successor program to its current bailout, which will be focused on structural economic overhauls rather than fiscal measures.
The government said that reforms will be carried out in cooperation with the Organization for Economic Cooperation and Development, while it will not allow the budget to be derailed.
Greece’s new anti-bailout government, led by Prime Minister Alexis Tsipras, laid out a lengthy list of policy actions, including a gradual increase in the minimum wage and a boost to the threshold of tax-exempt income. The measures would breach the terms of the country’s emergency loans agreement with the euro area and the International Monetary Fund.
German political leaders have said they will not extend more assistance to Greece without strings attached. German Chancellor Angela Merkel said in Washington on Monday that the existing aid programs are the basis for Greek talks.
“I’m waiting for Greece to come forward with a viable recommendation, and then we’ll talk about it,” she said.
–With assistance from Paul Gordon in Istanbul.