EU deal on reforms, loans next week: Greek minister

EU deal on reforms, loans next week: Greek minister

Athens (AFP) - Greece's economy minister on Thursday said the country would next week reach a long-awaited accord with its creditors providing funds vital to avert a state default.

"I think at the beginning of next week we will have a deal, both over the reform package proposed by the Greek government, and over the flow of funding," Giorgos Stathakis told Antenna TV.

Greece's new radical left government is in a race to reach an accord with its EU-IMF creditors by next month before state coffers run dry.

The radicals, who came to power in January pledging to roll back unpopular austerity reforms, have been told by the EU and IMF they won't received any of the money remaining in Greece's 240-billion-euro ($260 billion) bailout until they submit a credible alternative reform plan.

Prime Minister Alexis Tsipras discussed the issue in a phonecall with International Monetary Fund head Christine Lagarde, a government source said.

Lagarde, who in 2010 in her capacity as French finance minister had sent Greece a confidential list of Greek citizens with Swiss bank accounts, told Tsipras that the country had done "absolutely nothing" to crack down on tax cheats and make the rich pay their dues, the source said.

Tsipras agreed, the official added, and noted that a "socially fair" tax system was among the government's priorities.

Athens faces a heavy repayment schedule from June onwards, with over 6.8 billion euros due in July alone.

Greek banks were until now the main source of financing for the government, but the European Central Bank has restricted their ability to purchase short-term debt known as treasury bills, the main instrument used by Athens for emergency financing.

This week, the ECB explicitly urged Greek banks to avoid increasing their exposure to Greek sovereign debt.

And the government on Wednesday also failed to persuade European officials to hand back 1.2 billion euros which it says was unduly returned to the eurozone's bailout fund.

Some confort came on Thursday from the state manpower organisation OAED, which said it would provide 120 million euros from its cash reserves for state debt purchases.

The Financial Times on Tuesday reported that the government has already drawn funds from state corporations to meet its financing needs.

The FT said the government had drawn over 600 million euros from the Athens metro company, the main power provider PPC and the Athens water company.

The finance ministry did not comment on the report.

Last month, European officials gave Greece until April to come up with an alternative reform plan.

The government has pledged to submit a detailed list by Monday.

Greek officials are hopeful that talks between Prime Minister Alexis Tsipras and German Chancellor Angela Merkel earlier this week have improved chances of a breakthrough.

"After the talks, the political climate is excellent," Stathakis said.

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