Ministers and envoys discuss budget, actions

Finance Minister Euclid Tsakalotos and Economy Minister Giorgos Stathakis had their first meeting yesterday with the envoys representing Greece’s international creditors in Athens. They discussed the state of the budget, the outlook for the further recapitalization of Greek banks and a controversial privatization fund into which Athens has pledged to transfer 50 billion euros of assets.

“There was convergence on some issues, and less convergence on others,” Tsakalotos told reporters after the meeting, which was held at the central Athens hotel where the envoys are staying and lasted around six hours. The talks took place in “a very good climate” and will continue, he said.

Both sides are hoping to wrap up negotiations by August 11, which would allow plenty of time for the finalization of a third bailout, its ratification by various eurozone parliaments and the disbursement of aid to Greece, which must meet a debt repayment of 3.2 billion euros to the European Central Bank on August 20.

Creditors have suggested that Greece would need to legislate a third set of so-called prior actions to secure the release of further funding, while government officials counter that an agreement with lenders does not call for more measures.

A key issue discussed yesterday was the state of Greece’s finances. Creditors want Greece to record a primary surplus target of 3.5 percent of gross domestic product by 2018. But as the country is expected to plunge into a recession of up to 3 percent this year, achieving this target will be difficult without additional austerity measures.

Another key concern is the recapitalization of Greece’s cash-strapped lenders who have been hard hit by a wave of deposit withdrawals, an extended bank holiday and capital controls.

In a related development, a spokesperson for the European Commission said that calls by the International Monetary Fund for debt relief for Greece were “fully compatible” with the European agenda for negotiating a third bailout.