Greek Prime Minister Alexis Tsipras said the conditions that international creditors are demanding in exchange for more bailout money are “clearly unrealistic.” He also said the nation is getting closer to a deal.
Either way, Greece is hurtling toward a default unless his government seals an agreement or gets another extension before the euro area’s bailout of the Mediterranean nation expires June 30.
Speaking to parliament in Athens late Friday, the embattled Greek leader went on the attack after telling German Chancellor Angela Merkel and French President Francois Hollande on Thursday that a list of proposals set by creditors to unlock bailout funds can’t be the basis for a deal. German and French officials declined to comment on the contents of the call.
The latest proposal was an “unpleasant surprise,” Tsipras told lawmakers, adding that voters are asking the government “not to succumb to the irrational, blackmailing demands of our creditors.”
“The Greek government cannot consent to unreasonable proposals that call for devastating measures for pensioners and Greek families,” he said. “I want to believe that it was a bad negotiating trick and will be withdrawn.”
Even with those comments, Tsipras said Greece is “closer to a deal than ever before.”
“I’m sure that in the coming days our realistic and consistent position will be vindicated,” he said.
Greece notified the International Monetary Fund on Thursday that a 300 million-euro ($333 million) payment due Friday would be deferred and bundled with three more payments at the end of June. The move was a 180-degree turn by the government and caught many by surprise. While bundling the transfers is permitted under IMF rules, the deviation from standard practice adds to signs that Greece may be readying for a potential breakdown of talks after a four-month-long impasse.
“Tsipras has his back against the wall,” said Miranda Xafa, a former Greek representative to the IMF who runs a consultancy in Athens. “If a deal is not reached next week, in time for parliamentary approval of the deal, we are staring at disorderly default, deposit withdrawals, capital controls, and social unrest. I think a deal is in the making.”
While a Greek official had said earlier this week that the euro region was pressing for an agreement to be wrapped up by June 14, Tsipras said Friday that date isn’t a deadline. “There’s no limit to the time for negotiations,” he said.
Tsipras said the IMF’s consent to the bundling means “it’s finally clear to everyone, and mostly understood by the markets themselves, no one wants a rift. And time now is running out not just for Greece, but for everyone.”
The government’s main targets for a deal with Greece’s creditors remain lower primary budget surpluses in coming years, on which the two sides have already agreed, as well as some kind of debt relief and the protection of pensions and wages, Tsipras said.
The benchmark Athens Stock Exchange plummeted 5 percent before Tsipras spoke on Friday, the most since January. The yield on Greek 10-year bonds added 31 basis points to 11.22 percent, the biggest increase since May 26. The 10-year yield is still down from this year’s high of 13.93 percent and a record 44.21 percent in 2012. The two-year yield rose 198 basis points to 25.22 percent.
The IMF delay wasn’t related to a lack of funds, as Greece had enough cash reserves to make the payment due Friday, said a person familiar with the country’s financing position. The official asked not to be named as he wasn’t authorized to discuss the matter publicly.
“If they come up with alternatives on our proposal, it should be financially correct and wise from an economic perspective,” Jeroen Dijsselbloem, who leads the euro-area group of finance ministers, said in The Hague. “We’re waiting for their reaction. We were hoping to get it by today.”
Merkel and Hollande have spoken with Tsipras several times over the last week to try to resolve the standoff. The conversations “naturally are constructive,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin. He declined to comment on the substance of Thursday’s call.
Debt Relief Debate
The IMF, European Commission and European Central Bank have proposed “something which is very reasonable,” IMF Chief Economist Olivier Blanchard said earlier Friday at a conference in New York. A Greek agreement would require more financing from the IMF’s European partners and “probably some debt relief,” he said.
Tsipras said the prospect for a debt restructuring is a requirement of any accord.
After listening to Tsipras address lawmakers on Friday night, Slovak Finance Minister Peter Kazimir said he wondered “whether this is the same Tsipras who was in Brussels and Berlin this week.”
Kazimir, who commented on his social media account, urged Tsipras to “focus on completion of program - that’s mutual priority. ‘‘Debt restructuring is not on the table,’’ he said.
Half of Greeks said the Syriza-led government should abandon its so-called red lines if creditors don’t accept them in order to have an agreement, according to a poll published Friday by the newsit.gr website. A large majority, 74 percent of those polled, said they wanted Greece to remain in the euro. The poll was conducted June 3-4.