Greece shrugs off debt relief delay, seems confident of deal

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oPeople are silhouetted under a fluttering Greek national flag atop the archaeological site of the Athens Acropolis

By Michele Kambas and Lefteris Papadimas

ATHENS (Reuters) – The Greek government on Tuesday appeared calm after its lenders failed to agree on debt relief for the crisis-hit nation, saying it was confident a deal could be brokered in the next three weeks.

Athens’s creditors, including euro zone lenders and the International Monetary Fund, failed to agree on debt relief for the crisis-hit nation after an eight-hour meeting in Brussels on Monday but will aim to reach a deal at a meeting in June.

Despite the apparent setback, Athens said it would “exhaust all efforts” for a deal at a new meeting of euro zone finance ministers on June 15.

“It was clear .. that a decision for a short postponement giving us time to prepare and work on a better solution is preferable to taking a decision which just defers the problem,” government spokesman Dimitris Tzanakopoulos told reporters.

The IMF and other euro zone nations are at odds over how, whether and when to offer Greece debt relief. The Washington-based fund says it won’t join the country’s latest bailout without clarity on the matter.

Poul Thomsen, the IMF’s European Department head, reiterated that on Tuesday, saying the fund wanted to see ‘specificity’.

Lenders agreed in principle in 2016 to consider debt relief but have not specified how.

But some European countries, including Germany, say any debt relief should be considered in 2018, worried that concessions could affect the pace of economic reforms in Athens.

Greek lawmakers approved a series of tax rises and pension cuts last week, over and above the previous dozen cuts to its national pensions since the onset of the crisis in 2010 and the crippling austerity. Greece has lost a quarter of its national output in that time.

They did not agree either on releasing new funds that Athens needs to repay 7.3 billion euros in loans maturing in July. However, Tzanakopoulos said the disbursement of funds and the question of the IMF’s participation in the program were not connected.

“The Eurogroup … approved the technical agreement between the Greek government and institutions and put in motion the disbursement of the tranche over the coming period,” he said, referring to reform goals set by lenders.

Financial aid the country has received since its crisis began in 2010 has pushed its debt levels to 179 percent of national output, a figure the IMF sees as unsustainably high.

“We believe that in the coming weeks we will have the opportunity to work hard toward covering those gaps and reaching a desirable solution,” he said.

(Writing by Michele Kambas; Editing by Catherine Evans and Hugh Lawson)

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