Germany loosens pension cut demands

Greece’s creditors hit a roadblock over the conditions for disbursing the next portion of emergency loans to Europe’s most indebted state, as Prime Minister Alexis Tsipras pointed the finger at the International Monetary Fund for yet another delay in the review of the country’s bailout, Bloomberg reports.

Euro-area finance ministry officials, the European Central Bank, the European Commission and the IMF couldn’t agree on Monday how Greece can reach a budget surplus before interest payments of 3.5 percent of gross domestic product in the medium term, according to three people with knowledge of the talks.

The Washington-based fund had a bleaker outlook on Greece’s economy than its European counterparts and doubts Tsipras’s proposals for overhauling the pension system are sustainable, said the people, who requested anonymity because the meeting was private.

“The difference between the Europeans and the IMF largely comes from how much confidence each side has in the Greeks’ ability to raise, and save,” Eurasia Group analyst Mujtaba Rahman wrote in a note to clients on Monday. “Ultimately, we think the Greeks and Europeans are going to have to move closer to the IMF position.”

In order to unlock more aid from an 86 billion-euro ($93 billion) bailout package forged in August, Greece and its creditors need to agree on spending, tax and pension reforms that would achieve the targeted budget surplus. A separate meeting between officials representing creditor institutions in Frankfurt on Sunday ended without consensus.

IMF statement

Greece and its creditors need a program of reforms and debt relief that adds up, IMF spokesman Andreas Adriano said in an e-mailed statement, when asked to comment.

Negotiations are deadlocked on three mutually incompatible red lines: Tsipras’s refusal to accept additional pension cuts; Europe’s refusal to deliver deeper debt relief to ease fiscal targets required to make the country’s public finances sustainable; and the demand by some euro-area states that the IMF contributes to the latest Greek bailout, according to an official involved in the aid review. A breakthrough in the talks would require one of those lines to be crossed, the official said.

Even as talks stalled among Greece’s creditors, Germany has indicated it’s willing to give Athens leeway in its overhaul of the pension system in an effort ease the disbursement of more aid, according to a person familiar with the German position, Bloomberg adds.

Germany would now be satisfied as long as pensions are rendered sustainable, rather than enforcing mandatory cuts, which it had previously sought, said the person, who asked not to be identified because the negotiations are private.