Greece agrees fiscal targets with creditors en route to bailout deal

Greek Finance Minister Euclid Tsakalotos leaves the Maximos Mansion after a meeting with Greek Prime Minister Alexis Tsipras (not pictured) in Athens, Greece on Aug 9, 2015.
Greek Finance Minister Euclid Tsakalotos leaves the Maximos Mansion after a meeting with Greek Prime Minister Alexis Tsipras (not pictured) in Athens, Greece on Aug 9, 2015. PHOTO: REUTERS

ATHENS (AFP) - Greece and its creditors early Tuesday reached an agreement on fiscal targets for the debt-ridden nation, staying on course for a bailout deal to avert an August 20 default.

A government source told state agency ANA that Athens had committed to a primary deficit of 0.25 per cent of output in 2015, and a surplus in 2016, meaning that no new fiscal measures will be necessary until then, the source said.

In 2016 the primary surplus - the balance not including debt service - will be 0.5 per cent, followed by 1.75 per cent in 2017 and 3.5 per cent in 2018, the source said.

There was no immediate detail forthcoming from the government on other sticking points with the creditors, including how to deal with some 90 billion euros (S$138 billion) in bad loans burdening banks.

Greece needs to reach an agreement on its third bailout by August 20, when it must repay 3.4 billion euros to the European Central Bank.

Greek Finance Minister Euclid Tsakalotos had earlier urged "optimism that there will be a deal soon" after taking a break from marathon talks with EU-IMF negotiators late Monday to brief Prime Minster Alexis Tsipras.

"We have a discussion... that is going quite well," Tsakalotos said after the briefing.

"There are issues (the creditors) want to discuss again and again, but I think there should be optimism that there will be a deal soon... I don't know if it will be tomorrow morning, but soon, it will be soon," he said.

The talks between Tsakalotos, Economy Minister Giorgos Stathakis, and the ECB, the International Monetary Fund and the European Stability Mechanism aim to finalise the list of new reforms to be required of the Greek government in exchange for a lifeline of up to 86 billion euros.

But Germany may stand in the way of a full disbursement of the third bailout, which comes on top of two earlier rescue packages totalling 240 billion euros.

Appearing to throw cold water on the positive comments from both sides, German government spokesman Steffen Seibert told reporters: "The principle 'thoroughness over speed' applies here in particular." Berlin favours a stopgap solution such as the short-term EU bridging loan of seven billion euros that enabled Greece to meet debt payments to the IMF and ECB in June and July.

German lawmaker Ralph Brinkhaus, a top official of Chancellor Angela Merkel's CDU party, said earlier Monday that such a solution would be "better than a bad agreement".