Thursday, May 28, 2015

Markets jump as Alexis Tsipras says Greece is on the 'final stretch' towards bail-out deal

By Mehreen Khan 27 May 2015

Hopes of a draft agreement with creditors is dismissed by European officials after warnings from the White House over a Greek "accident" 

Alexis Tsipras has said a deal is near after four months of talks with creditors 

European creditors dashed hopes that Greece was finally nearing the end-stage of its bail-out negotiations, insisting both sides remained far apart on securing the embattled country’s future in the Eurozone. 

Greek stock markets jumped after comments from prime minister Alexis Tsipras that the country was "close" to a deal, following reports the two sides had begun the process of drafting an agreements 

"We have made many steps. We are on the final stretch towards a positive deal," said Mr Tsipras. 

"This agreement will be positive for the Greek economy, this agreement will redistribute the [financial] burdens and I believe that, very soon, we will be in a position to present more information," said the Leftist premier. 

Athens' benchmark closed nearly 4pc up on the day. 

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Alexis Tsipras @tsipras_eu
We are negotiating to obtain secure & stable conditions, in advance, for #Greece's economy.
3:36 AM - 28 May 2015
His comments came as officials met for talks in Brussels over the country's bail-out conditions.
But European officials moved to immediately dampen hopes that an agreement was imminent. Vice president of the European Commission Valdis Dombrovskis said both sides were "still not there yet". 

“We are working very intensively to ensure a staff-level agreement," he said.
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Athens’ Leftist government has maintained it will not cede to creditor demands to overhaul its VAT system, slash pensions, and implement labour market reforms which make it easier to fire workers. 

France’s finance minister Michel Sapin said commitments had yet to be “put on paper”. Eurozone officials are due to hold a teleconference on Thursday to further discuss the country's reform efforts. 
Securing a release of €7.2bn in bail-out funds is crucial if Athens is to continue meetings its domestic and international obligations. 

The country faces a €1.6bn payment to the IMF in June - a bill which the Leftist government has vowed to miss in favour of paying out its public sector salaries and pensions.
Mr Tsipras added his government would fulfil its latest monthly wages and pensions obligations at the end of the week. 

Greece’s turmoil has caused concerns at the highest levels of political diplomacy. US treasury secretary Jack Lew warned that any minor miscalculation could "lead to a crisis that could be potentially very damaging". 

Dismissing the notion that the fallout from a "Grexit" could be contained, Mr Lew urged both sides to "double down" and strike an agreement. 

"Brinkmanship is a dangerous thing when it only takes one accident. Everyone has to double down and treat the next deadline as last deadline and get this resolved," said Mr Lew.
Former US treasury secretary to Bill Clinton, Larry Summers added the failure to strike a deal would leave Greece “facing an abyss”. 

The country's four-month stalemate has seen capital flee the country as ordinary Greeks have rushed to withdraw their money from the country's banks. According to reports, an estimated €5bn left the financial system in April, up from only €1.9bn in March. 

The European Central Bank has been drip feeding liquidity to the banks to keep them solvent. In its latest decision on Greece, the ECB decided to leave its emergency funding ceiling unchanged at €81.1bn. 

Although polls show most Greeks still wish to remain part of the euro, the mood in the country suggest support for the single currency is 

"more flimsy than opinion polls suggest", said Gabriel Sterne of Oxford Economics. 

“The best way to characterise Greek popular opinion is ‘angrily resigned’ to seemingly endless economic misery," said Mr Sterne. 

“There is universal anger over creditor treatment given previous fiscal effort and an acceptance that the country is near-bankrupt.”

Markets jump as Alexis Tsipras says Greece is on the 'final stretch' towards bail-out deal - Telegraph