Greece, creditors get closer on terms

Derek Gatopoulos
Associated Press

Brussels — Greece and its creditors moved closer to clinching a deal this weekend that would keep the country from defaulting on its debts and falling out of the euro bloc, after Prime Minister Alexis Tsipras made more concessions Friday.

Greece has agreed to reforms that are close to what creditors have demanded before they release new loans, officials said on condition of anonymity because of the sensitivity of the negotiations. The creditors in return offered Greece a five-month extension to its bailout program, which is due to end Tuesday.

The concessions come only days after Greece proposed 8 billion euros in budget savings over two years. But the creditors, particularly the International Monetary Fund, said those proposed measures were not good enough, arguing they rely too much on business taxes that could hurt growth.

Friday’s latest proposals brought the sides much closer together, enough for some to anticipate that an emergency meeting on Saturday of the eurozone’s 19 finance ministers could bring a decisive breakthrough.

“Tomorrow’s meeting is of decisive character,” German Chancellor Angela Merkel said after meeting Tsipras and French President Francois Hollande.

European Commission President Jean-Claude Juncker agreed. “There is a real chance to conclude an agreement,” he said, adding that Saturday was “a crucial day not only for Greece but for the euro area as a whole. I’m quite optimistic but not overly optimistic.”

Under the latest proposal, Athens said it will cut spending on pensions, a key requirement by creditors. Greece will reduce the contribution from the state to pensions by between 0.25 percent and 0.5 percent of GDP this year and by 1 percent next year.

An official from one of the creditor institutions said that if you assess both sides “the difference now is very, very small.”

According to the text of creditors’ proposals seen by the Associated Press, Athens was offered an extension to its bailout program through November, with loans worth 15.5 billion euros. That includes 7.2 billion euros from the existing rescue program.

A Greek government official expressed dissatisfaction with the terms.