Deal ‘close’ on Greek cash crisis

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Greece’s finance minister has said he expects an agreement with bail-out creditors within the next week, which would save the country from fast-approaching bankruptcy.

“I think we are very close,” Yanis Varoufakis said. “Let’s say (it’s a matter) of about a week.”

For almost four months, Greece’s radical left-led government has been haggling with its creditors from the 19-nation eurozone and International Monetary Fund over economic reforms it must make to secure a 7.2 billion euro (£5.2bn) cash injection.

That is the final payment due from the country’s 240 billion-euro (£173bn) bail-out programme, launched five years ago after its public finances spiralled out of control and it was locked out of international bond markets.

In a late-night interview with private Star TV, Mr Varoufakis said creditors also appeared to believe that the time was ripe for a deal, but he insisted that he would reject any compromise that the radical government in Athens considered to be “non-viable”.

Earlier, prime minister Alexis Tsipras said the country tabled detailed proposals for a viable deal, but warned Greece was in a state of “financial strangulation”.

Over the past few weeks Greece has survived by scraping together cash from reserve accounts to pay debts as well as day-to-day commitments like wages and pensions.

However, Athens admits it is running out of options as further debt repayments are due next month. If no deal is agreed, Mr Tsipras’s government may be faced with a choice of what to pay, imposing capital controls or even leaving the euro.

“I assure you that if we face a dilemma between paying a creditor who refuses to sign an agreement with us and a pensioner, we will pay the pensioner,” Mr Varoufakis said. “I hope we will be able to pay both.”

Mr Tsipras also blamed Greece’s creditors for the liquidity crunch.

“The lack of liquidity is neither the choice nor the responsibility of the Greek government,” he said. “It is a tough negotiating tactic of our partners and I do not know whether everybody in Europe feels proud of it.”

Government spokesman Gabriel Sakellaridis said to honour its debt obligations this summer, Greece needed more financial assistance. As a result, he expected a deal with creditors “by the end of May”.

Markets appear to be uncertain about how the latest episode in the Greek debt crisis will pan out. Though uncertainty over Greece caused the interest rate on the government’s two-year bonds – a gauge of default risk – surge about three percentage points to above 24 per cent, the Athens Stock Exchange closed 1.6 per cent higher.

In the talks, Athens is proposing reform measures that might protect Greeks hammered by a six-year recession, but lenders say the proposals are too vague.