Greece: 2 long months of fraught debt talks

Greece had set a self-imposed deadline of Friday to come to a deal with its creditors to unlock 7.2 billion euros in bailout funds and stave off default.

But two months of negotiations have wrought no agreement, with the eurozone warning that not enough progress had been made.

- How did this latest series of debt talks come about?
 

On February 20, Greece obtained a four-month extension from its creditors for its massive bailout.

The European Union, the European Central Bank and the International Monetary Fund agreed to continue providing financing for the country until June 30, subject to reforms that Athens must undertake.

Greece was required to submit a list of economic and other reforms by late April, with creditors to scrutinise the concrete details of the measures as well as verify if implementation of these reforms have begun.

The creditors have said they would not unlock the last tranche of a 240 billion euro rescue package amounting to 7.2 billion euros unless they are satisfied with the reforms.

- Why are the negotiations taking so long to conclude?

Each side has been trading blame for the slow progress in talks.

The Greeks have been criticised for their lack of willingness to engage in the technical discussions and for their failure to provide concrete numbers.

Athens however believes that it has fulfilled its part of the bargain and has presented a substantial list of reforms. Its reform plan is based on an expected increase in tax intake rather than on further cuts in spending.

The government has said that it would not cross certain red lines in these negotiations -- reform of the employment market, pension cuts, modalities of privatisations and an increase in value-added tax (VAT).

- What is the deadline for a deal?

A deadline has so far proven mostly arbitrary as it has been pushed back on several occasions -- first it was mid-March, then the beginning of April, then mid-April, then April 24.

May 11 is now the next date when eurozone finance ministers are due to meet.

Greece's creditors say that the only real deadline is June 30, when the EU's second bailout programme to the country ends. It is also the date for potential new discussions on a third rescue package for Greece.

Even though everyone agrees that Greece cannot do without some form of aid beyond June, Eurogroup chief Jeroen Dijsselbloem has said it is "difficult to talk" about any negotiations after June if there is no deal for the current period.

- How much time can Greece hang on financially?

The Greek government's decision this week ordering all public institutions to transfer their funds to the state to help pay salaries, pensions and debt servicing costs on time, gives an idea of the cash crunch Athens is facing.

It took an urgent measure as the treasury has reported declining revenues even though the state had already tightened its spending and delayed payments to its suppliers.

Some 950 million euros would have to be paid out by May 12 to the IMF.

Saxobank economist Christopher Dembik said Athens would face a financial squeeze until the summer, with some 7 billion euros due for repayment.

The uncertainty is further hurting the economy with businesses holding off investors and consumers wary of spending.

Without a deal by June, "everything will take a more difficult turn," Greece's deputy prime minister Ioannis Dragasakis said.

Even though eurozone leaders have reiterated their commitment to keeping Greece in the single currency bloc, Dembik said that all other scenarios -- including a Greek default within the eurozone are possible.