Greece and international creditors sought to put final touches to a multi-billion euro bailout accord on Monday to keep the country financially afloat and meet an important debt repayment to the European Central Bank within days.
Germany set out “strict” conditions for further aid and said it would be sensible to link the size of the first tranche to Greece’s progress in carrying out reforms, a reflection of worry around the euro zone that Athens might not do as promised.
Greek ministers and representatives of European institutions and the International Monetary Fund resumed talks on Monday morning after a marathon Sunday session that ended in the pre-dawn hours.
An accord for up to 86 billion euros ($94 billion) in fresh loans to the debt-stricken nation must be in place by Aug. 20, when the repayment to the ECB is due. Greek bond yields fell as hopes grew of a speedy end to talks.
An agreement would mark the end of a painful chapter on bailout talks for Greece, which fought against austerity terms demanded by creditors for much of the year before accepting a deal under the threat of being bounced out of the euro zone.
“From 12 midnight, the two sides started the final stretch, discussing the final stretch – combing through the final text, sentence by sentence, word by word,” a Greek finance ministry official said.
Greek officials had earlier said they hoped to conclude negotiations with creditors by early Tuesday at the latest. The European Commission said it anticipated a deal this month.
“A deal is feasible. A deal can be reached in the month of August, preferably before Aug. 20,” European Commission spokeswoman Annika Breidthardt said.
Greek banks could get an initial capital injection soon after a bailout deal is clinched, as much as 10 billion euros, even before the ECB completes a stress test, a euro zone official familiar with the issue said on Monday.
The official, who asked not to be named, said a test may not be finished before October but that it was recognised the Greek banks need urgent capital to normalise their operations.
Germany on Monday stressed its wish for “quality before speed” in the negotiations, threatening to slow down the process as it pressed for strict conditions to be linked to aid.
Popular misgivings run deep in Germany, the euro zone country that has already contributed most to Greece’s two bailouts since 2010, about funnelling yet more money to Athens.