Tsipras warns of more European uncertainty if bail-out talks drag on

Drawing out Greece’s troubled fiscal talks and creating uncertainty during tough times for Europe was not a smart choice, Greek Prime Minister Alexis Tsipras warned on Sunday.

Greece’s EU and IMF creditors have been locked for months in a standoff over debt relief for Greece and budget targets demanded from Athens. The IMF believes demands on Greece sought by the Europeans are too ambitious. But if the eurozone is going to stick with its plans, then the IMF wants the tax hikes and pension cuts needed to meet them before it will lend more to Athens.

Talks between Greek officials and representatives from its creditors aimed at freeing up fresh funds resumed in Athens last week.

“Returning to uncertainty is not the smartest choice, especially while Europe is facing major challenges,” Tsipras told the Greek weekly Documento.

Tsipras argued that Greece’s current rescue programme, its third since 2010, would collapse if his government were to fall.

His leftist-led coalition has just 153 MPs in the 300-seat parliament and it is unlikely that even the charismatic Tsipras can push through another package of austerity reforms.

“A breakdown in talks in order to lead the country to elections would cause a de facto collapse in the [bail-out].”

He added that creditors had “no choice” but to trust his leftist government to take the country out of an economic crisis continuing for an eighth year.

“Either this government succeeds, or the rescue programmes will fail,” Tsipras said.

Also on Sunday, Germany’s Der Spiegel magazine said Greece and its eurozone partner countries were now close to a deal. Der Spiegel said this would include debt relief, a lower primary surplus target, IMF support and recognition of the country’s debt as sustainable — plus immediate reforms to be adopted by Athens.

The German and Greek finance ministries declined to comment on the report.

At a Eurogroup meeting on February 20, Athens agreed to discuss additional tax and pension reforms and labour market regulation. But Tsipras insisted on Sunday that these reforms would have “zero” fiscal effect in the austerity-worn nation.

Athens needs the latest tranche of bail-out cash to meet €7bn of new debt payments in July or risk defaulting on its loans. The deadlock has spooked markets with fears of a return to the crisis of two years ago.