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Eurozone ministers seek debt deal for Greece

[BRUSSELS] Eurozone finance ministers will on Tuesday push for a deal to unlock bailout cash for Greece and resolve a row with the IMF over debt relief for Athens.

The 19 ministers from the countries that use the euro meet in Brussels two days after Greek lawmakers passed yet another round of spending cuts and tax hikes as well as a guarantee of further measures in case of budget overruns down the road.

Greece is looking to unlock as much as 11 billion euros (S$16.54 billion) at the Eurogroup talks in the latest payout from its 86 billion euro bailout programme agreed last July. The meeting begins at 1400 GMT.

Greece urgently needs the next tranche of bailout money to repay big loans to the European Central Bank (ECB) and IMF in July, and has already fallen behind in paying for everyday government duties and public sector wages.

The outcome of the meeting remains highly uncertain, due to a row between Greece's creditors, the eurozone governments and the International Monetary Fund, over the state of the Greek economy and debt relief.

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The IMF believes that Greek public debt at the current level of about 180 per cent of gross domestic product is unsustainable and must be reduced.

The IMF warned in a report on Monday that without restructuring, the debt load could soar to as much as 250 per cent of output by 2060.

For the IMF, "providing an upfront unconditional component to debt relief is critical to provide a strong and credible signal to markets about the commitment of official creditors to ensuring debt sustainability."

The IMF said in the short-term this could be achieved by offering longer loan periods and fixed interest rates on new loans to Greece.

It also called for most of Greece's existing debt to be re-financed to a fixed interest rate of 1.5 per cent until 2040.

The fund also warned of unrealistic economic targets set by the Europeans.

Germany, the eurozone's economic powerhouse, is deeply opposed to alleviating any of Athens' debt and claims it is not necessary for now.

German finance minister Wolfgang Schaeuble last year only grudgingly accepted to keep Greece in the euro and believes Athens should be granted relief in 2018 only "if necessary".

Fortunately for Athens, Germany also wants the IMF to remain in the bailout and will have to cede ground to the fund on debt relief to achieve that.

Trying to strike a positive note, Mr Schaeuble on Saturday said the IMF and Europe were "not too far apart".

The talks on Tuesday come after Greek lawmakers narrowly adopted another batch of controversial reform commitments.

The measures included the establishment of a new privatisation fund that will manage Greece's public assets more independently.

"European leaders get the message that Greece is sticking to its promises. Now, it's their turn," Greek Prime Minister Alexis Tsipras told lawmakers.


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