by Nikos Chrysoloras & Eleni Chrepa, Bloomberg

 Greece’s latest cycle of talks with its creditors started with a quarrel, as officials argued over which up-front commitments the government has yet to implement in order to tap emergency loans next month.

Technical experts from the European Central Bank, the International Monetary Fund, the European Stability Mechanism and the European Commission are in Athens to negotiate with their Greek counterparts. The list of policies that must be legislated over the next three years is in exchange for a lifeline of as much as 86 billion euros ($95 billion).

A so-called Memorandum of Understanding would need to be agreed upon in the next two weeks, so that a bailout can be in place before a payment on bonds held by the ECB comes due on August 20. Failure to do that might force another bridge loan to avert default, which may also come with strings attached.


The latest talks will focus on changes to the Greek pension system, labor market, fiscal policy, and market regulation, the Finance Ministry said on Monday.

“An agreement by the second fortnight of August is possible,” EU Commission spokeswoman Mina Andreeva told reporters in Brussels today. “Talks only started yesterday so it’s premature to specify any actions or deadline.”

Restoring Trust

Creditors want Greek Prime Minister Alexis Tsipras to restore trust by legislating more belt-tightening measures now, before a disbursement from the new ESM-backed program can be made. In two votes earlier this month on so-called prior actions required for negotiations to begin, about a quarter of his Syriza-party lawmakers defected, stripping the premier of his parliamentary majority and forcing him to rely on opposition support.

A Greek Finance Ministry official on Monday told reporters that Greece has already voted through Parliament all the measures it needed to implement before a deal can be reached.

Creditors disagreed.

“More reforms are expected as part of the statement from the Greek authorities, to allow for a swift disbursement,” Andreeva told reporters on Monday. “Continuing the pace of reforms will also help reinforcing the trust between all partners.”

Capital Controls

Greece imposed capital controls in June following a government decision to hold a referendum on a bailout plan offered by the euro area. After voters delivered a resounding “no” vote to the economic conditions attached, Tsipras, who turned 41 on Tuesday, went on to agree to a plan on similar terms under the threat of financial collapse.

Syriza’s political secretariat will convene for a second day on Tuesday, in order to prepare a party congress this fall, after Tsipras asked his backbenchers to clarify their positions.

Demands for further prior actions from creditors, including tax increases for farmers and pension cuts, could add more strains to the governing coalition.

“We proceed in an organized manner and we hope that everything will go well at the end,” Finance Minister Euclid Tsakalotos said in a statement on Monday, as talks with creditors started.