Greece’s lenders are due back in Athens on Monday following a brief break in the bailout negotiations for the International Monetary Fund’s spring meetings, but the prospects of the program review being completed in time for Friday’s Eurogroup appear slim.
The key issues that need to be settled by Athens and the institutions concern income tax, pension reforms, the sale of nonperforming loans (NPLs) and the creation of the new privatization fund.
Some Greek officials see an agreement on the future of NPLs as a potential catalyst to an overall accord, while others point out the significance of the changes to income tax.
Finance Minister Euclid Tsakalotos has insisted that the government will not lower the tax-free threshold below 9,091 euros. It is currently 9,545 euros but the IMF would like to see it drop to 8,180.
Sources said Tsakalotos has told the lenders’ representatives that he is prepared to resign over this issue if the creditors insist on reducing the ceiling further.
In his meetings last week with French President Francois Hollande and European Parliament President Martin Schulz, Prime Minister Alexis Tsipras is said to have stressed that failure to conclude the review swiftly could cause political instability.
Tsipras apparently argued that his government has made a number of compromises and that if it concedes further ground the deal is unlikely to be approved by coalition MPs, which could trigger new snap elections.
The government would like an agreement to be reached by Friday’s Eurogroup but this seems unlikely given that IMF officials underlined over the past few days that they feel the measures agreed between Greece and its European lenders so far will only produce a primary surplus of 1.5 percent of gross domestic product by 2018, rather than the targeted 3.5 percent.
An alternative is for an extraordinary meeting of eurozone finance ministers to be held before Orthodox Easter on May 1. However, there are doubts about whether even this deadline could be met.