Greece's major creditors are not ready to let the country drop out of the euro as long as prime minister Alexis Tsipras shows willingness to meet at least some key demands, according to two people familiar with the discussions. Chancellor Angela Merkel will go a long way to prevent a Greek exit from the single currency, though only so far, one of the people said. Every possibility is being considered in Berlin to pull Greece back from the brink and keep it in the 19-nation euro, the person said. For all the foot-dragging in Athens, some creditors are willing to show Greece more flexibility in negotiations over its finances to prevent a euro exit, the second person said.
The red line is that the Syriza-led government shows readiness to commit to at least some economic reform measures, said both people, who asked not to be named discussing strategy.
“Our view is that Greece is not going to exit the euro,” Stephen Macklow-Smith, head of European equity strategy at JPMorgan Asset Management in London, said in a Bloomberg Television interview on Friday.
While both sides have “very entrenched positions” in the negotiations, “if you look at the way the euro-zone crisis has developed, in every case what you’ve seen is in return for firm action you get concessions.”
The brinkmanship has sent Greek government bonds heading toward their worst week since Tsipras’s election in January at the head of an anti-austerity coalition. While the public rhetoric has escalated amid a standoff over releasing the last tranche of aid, creditors are willing to cut Greece some slack, the second person said.
Euro-area finance ministers are next due to discuss progress on Greece at their meeting on April 24th in the Latvian capital, Riga.
Greece's government remains confident an interim agreement with its creditors allowing disbursement of bailout funds can be reached by the end of April, a Greek official told reporters in Athens on Friday. "We're of the view that Greece will hold to the commitments it made to the institutions," Georg Streiter, Merkel's deputy spokesman, said when asked about the chancellor's stance.
Greece has meanwhile dismissed reports that it needs to tap remaining cash reserves to meet salary payments.
“News agencies’ reports that refer to the state’s cash reserves are groundless, we categorically deny them,” the Greek finance ministry said in a statement, without providing further details. Reuters reported earlier on Friday that Greece will need to tap all its remaining cash reserves across the public sector, a total of €2 billion , to pay civil service wages and pensions at the end of the month.
Agencies
