Greece ‘in crisis’ as officials insist deal is near

Greek government officials are insisting that a deal with the country’s international lenders over reforms is imminent, but one key business leader told CNBC that Greece needs to implement reforms fast, whether a deal is on the cards or not.

“Greece is in a liquidity trap. We need to rectify the situation and agree on certain issues,” Costantine Michalos, president of the Union of Hellenic Chambers of Commerce & Industry, told CNBC Tuesday.

“You don’t need an agreement with your lenders and partners to improve your tax collecting mechanism, you don’t need an agreement to improve your labor laws based on European norms on flexibility, and you don’t need an agreement in order to proceed with privatizations,” he added.

It comes as Greece’s Labour Minister, Panos Skourletis, added his voice to that of the prime minister and finance minister, insisting that a deal with creditors was imminent “in the coming days,” Reuters reported Tuesday.

Greece has been negotiating with creditors for months over reforms that — when implemented — could unlock a last tranche of much-needed bailout aid, worth 7.2 billion euros ($8.14 billion).

Sticking points in the talks have ranged from labor market and pension reforms to disputes over the privatization of Greek state assets, although Greece has made some concessions on the latter point.

Greek Prime Minister, Alexis Tsipras, on Monday ruled out further pension cuts, but said a list of proposals for an overhaul of the nation’s VAT (sales tax) regime had been sent to lenders and he claimed a deal was imminent.

Speaking at a meeting of the Greek Industrial Federation Monday, Tsipras said Greece had tabled proposals for a “viable deal with creditors” and that the country was “in the final straight for an agreement.”

The remarks were echoed by the country’s Finance Minister, Yanis Varoufakis, who added that Greece was near a cash-for-reforms deal with its euro zone partners and the International Monetary Fund (IMF) that would help it meet debt repayments next month.

“I think we are very close (to a deal) … let’s say in a week,” Varoufakis told Greek TV channel, Star TV. “Another currency is not on our radar, not in our thoughts.”

He also suggested that Europe’s bailout fund pay back the country’s maturing bonds held by the European Central Bank (ECB), and that Greece could pay it back at a later date.

There are also growing concerns that Greece could be facing bankruptcy, amid a risk of a default on debts to international creditors, with deadlines looming for repayments to the ECB and IMF next month.

Varoufakis himself said yesterday that if Greece had to choose between paying back the IMF or its own domestic wages and pensions bill next month, it would choose the latter.

The Hellenic Chambers of Commerce’s Michalos told CNBC that Greece was in a “unique” financial and political situation, with nearly all opposing political parties in Greece, “urging the Syriza government to reach an honest and mutually beneficial agreement.”

“This is a national crisis,” he said. “It’s the worst we’ve seen since the second World War and we should treat is as such.”