Latest deadline for deal between Athens, lenders May 9; Greek govt optimistic, sources pessimistic

A top government meeting chaired by Greek PM Alexis Tsipras was held on Tuesday afternoon, with all eyes now on a May 9 Eurogroup meeting as the latest deadline to achieve a first review of the Greek program (third bailout).

Previous deadlines in April and as late as May 1 have been successively missed, with the leftist Greek government and its institutional creditors unable to finalize measures included in the third memorandum signed last July.

Both the finance minister and deputy premier attended the meeting on Tuesday, with government sources afterwards optimistically pointing to efforts to “boost support” for the Greek side’s arguments by European governments that have already taken a stance against the IMF’s latest demands.

The Washington-based Fund has demanded an upfront and legislated “contingency package” worth 3.6 billion euros on top of a 5.4-billion-euro package of tax hikes and supplementary pension cuts.

The IMF’s position is that the Greek government will not meet primary budget surplus targets through 2018, the latter being 3.5 percent of GDP.

As far as the domestic public opinion front is concerned, top government officials, including Tsipras, conveyed both optimistic and defiant postures in the days after negotiations between Athens and creditors – Commission, ECB, ESM, IMF – broke off without an agreement.

Among others, Tsipras opined that “alliances (at the European level) are greater than at any other time (of the current economic crisis).”

Nevertheless, beyond the attempted “spin” for Greek audiences, sources close to the negotiations were quoted by Reuters as saying that negotiations for the first review are proceeding slowly, and that an agreement by the Eurogroup meeting of May 9 is unlikely.

The same sources said that more time will be necessary to achieve a deal over actions to be taken in the event that memorandum goals are not met.