European lenders dash Greek hopes for quick aid deal

Wed May 6, 2015 1:23pm EDT
 
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By George Georgiopoulos and John O'Donnell

ATHENS/FRANKFURT (Reuters) - European lenders on Wednesday dashed Greece's hopes for a quick cash-for-reforms deal in the coming days, leaving Athens in an increasingly desperate financial position ahead of a major debt payment next week.

Talks between the two sides have dragged on for months without a breakthrough and EU officials say Greece's leftist government has failed to produce enough concessions for a deal at next Monday's meeting of euro zone finance ministers.

"Since the last Eurogroup quite a bit of progress has been made," Eurogroup chief Jeroen Dijsselbloem said.

"Still, lots of issues have to be solved, have to be deepened more, with more details, so there will be no agreements on Monday. We have to be realistic."

Prime Minister Alexis Tsipras's government remains hopeful the Eurogroup meeting will acknowledge progress in the talks, possibly enabling the European Central Bank to let Greek banks buy more short-term government debt to ease a cash crunch.

But there was no sign in Brussels or Frankfurt that any such easing of the squeeze is likely soon without concrete evidence of progress on reforms.

The ECB's Governing Council of policy-setters approved increasing emergency funding to Greek banks by 2 billion euros at its weekly review on Wednesday, the biggest rise in recent weeks.

The governors also debated imposing a steeper discount on the security that banks offer for this assistance but held off on any change for now, people familiar with the matter said. That means such a switch will not happen for at least another week.   Continued...

 
A Greek flag is framed by marble pillars at the Attalos arcade in Athens February 26, 2015.  REUTERS/Yannis Behrakis