ATHENS, (Reuters) – Greece and its international lenders were locked in marathon overnight talks to seal a multibillion-euro bailout deal on Tuesday, racing against a countdown to European Central Bank debt repayments falling due in days.
The indebted country is hoping to wrap up a deal for 86 billion euros ($94.75 billion) in fresh loans by Tuesday so it can get parliamentary and other approvals for aid to flow by Aug. 20, when a 3.2 billion euro debt payment is due to the ECB.
“We are going into the final round of talks, looking at the Memorandum of Understanding from beginning to end,” a senior Greek government official said during a brief break in talks in Athens, referring to terms of the bailout accord.
The latest round of negotiations started early yesterday afternoon.
An agreement would mark the end of a painful chapter on bailout talks for Greece, which fought against austerity terms demanded by creditors for much of the year before accepting a deal under the threat of being bounced out of the euro zone.
After lengthy negotiations on Sunday and Monday, Greek Finance Minister Euclid Tsakalotos said talks were going “quite well” and was optimistic that an agreement will be reached soon.
“I don’t know if it will be (Tuesday) morning, but soon means soon,” Tsakalotos told reporters.
A senior Greek government official said dealing with a mountain of non-performing loans in the banking sector remained a sticking point. Athens wants to set up a “bad bank” to handle this, while creditors want non-performing loans bundled and sold to distressed asset funds.
Officials also said the two sides had yet to agree on setting up a sovereign wealth fund in Greece designed to raise 50 billion euros from privatisations, three-quarters of which would be used to recapitalise banks and to decrease the debt.
Both sides had agreed to deregulate the country’s natural gas market, sources said.
Greek banks could get an initial capital injection soon after a bailout deal is clinched, as much as 10 billion euros, even before the ECB completes a stress test, a euro zone official said on Monday.
The official said a test may not be finished before October, but that it was recognised that Greek banks urgently need capital to normalise their operations.
