April 24, 2015

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Don't write the deal off just yet

Not really a breakthrough but another step to bridge the divide was achieved in the hour-long meeting between Alexis Tsipras and Angela Merkel yesterday at the fringes of the EU summit on immigration. Though the content of their talk remains private, reports from Kathimerini and others suggest that Tsipras and Merkel have agreed that the primary surplus target should range between 1.2% and 1.5% this year and in 2016 respectively, significantly below the original targets (though still ambitious) and that Greece should push forward with privatising state assets. The two leaders also agreed on the need to boost the independence of the tax collection authority, the finance ministry’s General Secretariat for Public Revenues, and of the statistical office Elstat. But Greece remains committed to its so-called red line, namely pension and labour overhauls and VAT raises. 

Alexis Tsipras urges to speed up negotiations on reforms in the Brussels Group with the likelihood of an extraordinary eurogroup being held next week, rather than May 11. Tsipras said that he aims for a deal by the end of the month. Jeroen Dijsselboem considers this possible in principle but said it requires a lot of work. 

Angela Merkel stated after the meeting that everything must be done to prevent Greece running out of money before it reaches a cash-for-reform deal, as reported by Reuters. This is quite a conciliatory tone and signals that Germany would be ready to compromise to secure a deal. Without a deal, there might still exist some possibilities that have not yet been exhausted to fund payments, but there is a limit to this at the latest when big lump sum payments are due in July and August.  

To secure funds, Greek MPs are due to vote today on the government’s controversial decree forcing public organizations to allow the state to use their cash reserves following another day of stormy debates in Parliament, Kathimerini reports. New Democracy is expected to add to the tension today, suggesting that the decree is unconstitutional and also ask for a roll-call vote.

Our other stories

Today we also have stories on how the troika set targets; an important shift in German politics; French fiscal policy; the EU’s latest crisis summit; interpreting the latest economic data; an Espirito Santo update; and silly debt management ideas – Carinthia edition.

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