"Don't expect any deals today," the chairman of euro zone finance
ministers Jeroen Dijsselbloem told reporters, noting however, he was
"hearing good news from Athens" on headway made in negotiations on a
Greek reform package.
"There is more work to be done. We are determined to continue the
work. We're not there yet," International Monetary Fund Managing
Director Christine Lagarde said.
The package of reforms is aimed at producing a primary surplus of
3.5 percent of gross domestic product in 2018 "and beyond",
according to a deal between Athens and euro zone governments signed
But there is disagreement between Greece, the euro zone and the IMF
on whether the measures, which include pension and income tax reform
and setting up a privatization fund and a scheme to deal with bad
loans, will be enough to reach that number.
The IMF believes that as things stand now, instead of 3.5 percent of
GDP, Greece will only achieve a primary surplus - the budget surplus
before debt-servicing costs - equivalent to 1.5 percent of economic
output in 2018.
The Fund and the euro zone are also at odds over how long Greece
will be able to maintain a primary surplus of 3.5 percent and
therefore its ability to service its public debt in the long run.
The debt stood at 177 percent of GDP last year.
Germany and several other countries believe that with proper reforms
Greece can keep such a surplus for decades and point to the fact
that the country does not need to service its debt for the next
The Fund says this is unrealistic, and therefore the euro zone must
grant the country debt relief through extending maturities and grace
"Debt is a discussion we've not had before. The only thing we had
was a promise that if the Greeks would commit fully and deliver on
the program we would look at, if necessary, further debt measures,"
The range of views on whether Greece needs debt relief stem from
different macroeconomic assumptions among the lenders on Greek
growth and fiscal performance over the next 30 years, officials
"There is more to be done and a debt sustainability to be agreed
upon as well. It's critically important," Lagarde said.
[to top of second column]
But German Finance Minister Wolfgang Schaeuble said debt relief
talks were not a priority.
"That is not in the foreground. What is in the foreground is what
has been agreed last year must be implemented," he said, referring
to fiscal targets set last August.
Officials said differences over reforms in Greece have narrowed
substantially in the last few days and have flagged the possibility
of calling an extraordinary meeting of euro zone finance ministers
on April 28 to clinch a deal.
"I can tell you that there was very good progress in Athens. In my
view, we are close to an agreement," European Commissioner for
Economic and Financial Affairs Pierre Moscovici said.
One official close to the talks said some differences were as small
as 100 euros.
"Right now only immaterial discrepancies remain," the official said,
adding the main difference now was over personal income tax credits,
which now stood at 2,100 euros.
The IMF believes that Greece should not raise taxes further, but
broaden the tax base by eliminating lots of existing exemptions,
which it said now effectively exempted 55 percent of Greek
households, while the euro zone average was 18 percent.
"The IMF insists on a reduction to 1,800 euros and the Greeks have
come down to agreeing to 1,900 euros," the official said. "The
difference is 0.1 percent of GDP, which is less than 200 million
euros out of a package of reforms worth 5.4 billion euros," the
(Reporting By Jan Strupczewski and Francesco Guarascio; Additional
reporting by Philip Blenkinsop in Brussels; Editing by Hugh Lawson)
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