Greece sees reforms deal with lenders in next 10 days

[May 22, 2015] ATHENS (Reuters) - Greece expects to reach a cash-for-reforms deal with its creditors in the next 10 days and aims to meet all its payments in June, the government's spokesman said on Friday, after the prime minister met with EU leaders.

German Chancellor Angela Merkel and French President Francois Hollande held talks on the sidelines of an EU summit in Riga late on Thursday with Prime Minister Alexis Tsipras, hoping to speed the resolution of Athens' debt crisis.

"We think conditions have matured for (talks) to progress further and in the next 10 days, in May, for the deal to be sealed," government spokesman Gabriel Sakellaridis told Skai TV.

Since its election, Tsipras's leftist-led government has held four months of talks with the EU and the International Monetary Fund, seeking a deal that could release up to 7.2 billion euros ($8.1 billion) in remaining aid. But talks have stumbled over pensions, labor reform, fiscal targets and increases in value-added tax.

Shut out of bond markets and with remaining bailout aid locked, Athens faces debt repayments to the IMF totaling 1.5 billion euros next month, apart from paying civil servants and pensioners. The first installment falls due on June 5.

"The government aims to meet all of its payments and has proven this with great effort and under very difficult conditions," Sakellaridis said.

"The plan is to cover all payments, with priority on domestic needs and then those to lenders."

On VAT tax rates, Sakellaridis said Athens has proposed rates of 7, 14 and 22 percent in an effort to redistribute the tax impact and lighten the burden on lower income groups. But lenders want 11 and 23 percent instead and are pressing for an increase in VAT on energy to 23 percent.

"At a moment when we are discussing the Greek economy's competitiveness and reducing production costs for businesses, there cannot be any issue on raising (the tax rate) on electricity to 23 percent," Sakellaridis said.

He also said a deal with the EU and the IMF would allow the European Central Bank to include Athens in its quantitative easing program.

"Inclusion in this European Central Bank quantitative easing program falls within the framework of priorities of the Greek government."

(Reporting by George Georgiopoulos and Angeliki Koutantou; Editing by Robin Pomeroy)

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