April 17, 2015 / 9:23 PM / in 3 years

Eurogroup head warns against a game of chicken with Greece

WASHINGTON (Reuters) - Greece and the euro zone should not play a game of chicken to see who can hold out longer in negotiations about more lending to Athens in exchange for reforms, the chairman of euro zone finance ministers Jeroen Dijsselbloem said on Friday.

Eurogroup Chairman and Dutch Finance Minister Jeroen Dijsselbloem testifies before the European Parliament's Economic and Monetary Affairs Committee in Brussels February 24, 2015. REUTERS/Francois Lenoir

Speaking to reporters on the sidelines of the International Monetary Fund meetings, Dijsselbloem said representatives of Greece’s creditors would not be able to produce a deal for the approval of euro zone finance ministers on April 24th as hoped, because progress on agreeing reforms was painfully slow.

“Let’s not go into a game of chicken to see who can stick it out longer. We have a joint interest to reach an agreement quickly,” Dijsselbloem said.

He said at least a couple more weeks were needed for Greece and the institutions representing its creditors to reach an agreement on the reform package.

“It would be very welcome if they could present a more final outcome by May 11 - the next Eurogroup,” Dijsselbloem said.

He said it was unclear at which point exactly Greece would really run out of money and be unable to pay back the roughly 1 billion euros of IMF loans maturing in May.

“We have been worried about previous payments they were to make and yet they managed it, so I don’t know when it becomes really dangerous. But I think it is in our joint interest to stay away from that point,” he said.

He said he understood Greece’s reluctance to implement reforms agreed by the previous government.

“On the European side there is genuine room for compromise,” he said. But he stressed any new reform package had to be serious in terms of content.

One of the key reforms that Greece was facing was an overhaul of its pension system, which was now unsustainable, Dijsselbloem said. But he stressed there were many ways of reforming pensions.

“One of the elements to design a reform is the timeline - do you do it gradually, or do you do it immediately? Do you include only new pensioners or also existing pensioners? There are many, many ways to design a reform. The way it is done can be negotiated,” he said.

He said that talks with Greece were moving in the right direction, but “very, very slowly” and some of the big issues remained unresolved.

“But I also know that if we were to sit down and get serious, it could be done in a couple of weeks. Whether that is going to happen I don’t know,” Dijsselbloem said.

Reporting By Jan Strupczewski; Editing by Andrea Ricci

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