Greek PM sees bailout deal after Aug 15

French President Francois Hollande (right) and Greek Prime Minister Alexis Tsipras meet in Ismailia, Egypt.
French President Francois Hollande (right) and Greek Prime Minister Alexis Tsipras meet in Ismailia, Egypt.REUTERS

ATHENS (AFP) - Greek Prime Minister Alexis Tsipras and French President Francois Hollande agreed Thursday that Athens and its international creditors "can and must" reach a bailout deal after Aug 15.

Greece needs a deal that will unlock bailout funds by Aug 20, when it must repay some €3.4 billion (S$5.1 billion) due to the European Central Bank.

"The two leaders agreed that the negotiations can and must be concluded immediately after Aug 15," Tsipras' office said in a statement.

Tsipras and Hollande met in Egypt on the sidelines of a ceremony to inaugurate an expanded Suez Canal.

Tsipras earlier this week said that talks in Athens between Greek ministers and senior representatives of the European Union, the European Central Bank and the International Monetary Fund were in the "final stretch."

The Greek economy is suffering from the effects of capital controls imposed at the end of June, when talks with the creditors broke down, to avert a bank run - a procedure that has badly disrupted trade.

The economy is expected to contract by around three percent this year, and the finance ministry on Thursday reported a fall in the budget primary surplus - which excludes debt interest payments - to €238 million in the first half of the year, compared to €1.85 billion last year.

Meanwhile, state debts to private suppliers continue to grow at the rate of about €200 million a month, rising to €4.6 billion in June from €3 billion in December.

A quarter of Greek workers remain unemployed, including over 51 per cent of those aged under 25, official data showed on Thursday.

Tsipras is under pressure from a sizeable minority in his radical-left Syriza party who say the rescue package he agreed to last month piles further austerity on a weakened economy and goes against the government's campaign pledges.

In two successive reform votes last month, more than 30 lawmakers from Syriza refused to approve the measures included in the bailout, totalling up to €86 billion over three years.

With his popularity among Greeks still high, Tsipras has warned the dissidents of early elections in the autumn if they continue to resist the measures.