Eurozone finance chiefs upbeat on likelihood of Greek deal

BRUSSELS — Eurozone nations were cautiously optimistic on Monday that a deal on Greece’s bailout was finally within reach this week, amid fears the country might otherwise default on its debts and fall out of the euro.

With leaders from the 19 single currency nations gathering in Brussels, financial officials gave a tentative endorsement to new Greek proposals for spending cuts and reforms they would make in exchange for billions of euros in fresh loans.

“It’s an opportunity to get that deal this week,” said Jeroen Dijsselbloem, the Dutchman who chaired an emergency meeting of eurozone finance ministers ahead of the EU summit.

He said technical experts who are evaluating the Greek plan believe it “is broad and comprehensive but they really need to look at the specifics to see whether it adds up in fiscal terms.”

The news gave a boost to stock markets. Athens shares, which had lost much of its strong gains on the news that there has been no definitive deal at a meeting on Monday, rebounded on the positive comments. It closed nine per cent higher. The Stoxx 50 index of top European shares was somewhat less volatile and closed 4.1 per cent higher.

The need for a deal could not be more pressing. Greece must pay 1.6 billion euros ($1.8 billion US) to the International Monetary Fund in just over a week, on June 30. Further payments are due in July and August, and the left wing government in Athens does not have the money to pay them.

Negotiations on the reforms that Greece must undertake to secure its financial future have dragged on since February.

A debt default by Greece could destabilize its banks — Greeks are already withdrawing increasingly large amounts of money — and could in a worst-case scenario cause the country to have to leave the euro.

That would be hugely painful for Greeks but experts are more divided about its effects on Europe and the world economy. Several European countries have said publicly they are getting prepared for the possibility.

European Commission President Jean-Claude Juncker, who has been a key player in the efforts to broker a deal, said that “we are on the right path, but we still have some way to go.”

Leaders of the 28-nation European Union have a two-day summit starting Thursday and it is hoped that a full agreement can be reached then.