Greece nears debt deal in May as money runs low

Mon May 18, 2015 7:22pm EDT
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By Lefteris Papadimas and George Georgiopoulos

ATHENS (Reuters) - Greece is near a cash-for-reforms deal with its euro zone partners and the International Monetary Fund that would help it meet debt repayments next month, the country's finance minister said on Monday, as worries persist over a possible bankruptcy.

Athens has been defending its "red lines" in talks with lenders, refusing to yield on further pension cuts and more labor market liberalization to clinch a deal that would release remaining bailout aid, despite a pressing cash crunch.

"I think we are very close (to a deal) ... let's say in a week," Yanis Varoufakis told Star TV channel late show Ston Eniko. "Another currency is not on our radar, not in our thoughts."

Greece faces payments of about 1.5 billion euros to the IMF next month and 6.7 billion euros to redeem government bonds that are held by the European Central Bank and mature in July and August.

To give itself breathing space, it has proposed Europe's bailout fund pay for 27 billion euros of its bonds held by the European Central Bank, which start maturing in July and August, Varoufakis said, pledging to repay the fund over a longer term.

The move was the latest attempt by the outspoken minister, who has been sidelined in negotiations with creditors, to revive the idea of a debt swap to help Athens manage its upcoming debt payments but has not received any interest from lenders.

Greece's EU and IMF lenders have refused to talk about debt relief until the country reaches a reforms deal first.

While the leftist-led government hopes to be in a position to meet debt repayments and pay government workers and pensioners in June, it will opt for the latter if it faces a dilemma, its finance minister said.   Continued...

Greek Prime Minister Alexis Tsipras delivers a speech during the Economist Conference on "Europe: The comeback, Greece: How resilient?" in Athens May 15, 2015. REUTERS/Alkis Konstantinidis