< Back to News

Merkel Gives Greece 12 Days to Reach Financing Accord


German Chancellor Angela Merkel and French President Francois Hollande gave Greece until the end of May to reach a deal on its aid program, urging faster talks to end the standoff over the country’s financing.

Merkel and Hollande, standing side-by-side after meeting in Berlin on Tuesday, said they would impress the message on Greek Prime Minister Alexis Tsipras when they all attend a European Union meeting in Riga, Latvia, this week.

“We do expect that decisive progress now be made in the relevant forums, particularly in the so-called Brussels Group” comprising official creditors and Greek representatives, Merkel said at a joint news conference. Hollande said that “it’s in everyone’s interest that Greece stays in the euro zone, so it’s in everyone’s interest to have a lasting accord.”

The united stand by the leaders of the two biggest euro-area economies adds pressure on Tsipras to make a deal as the four-month standoff between Greece and its lenders rattles markets and raises questions about its future in the euro. The timeline was echoed by EU President Jean-Claude Juncker, as policymakers begin to coalesce around the end of May as a key date.

Greek shares rose for a second day on Tuesday, with the benchmark Athens Stock Exchange general index gaining 2.6 percent. Greek bonds rebounded after Monday’s selloff, with yields on notes due 2017 falling 122 basis points to 22.77 percent.

Greek stocks have delivered the highest returns of all primary equity indexes tracked by Bloomberg in the last month, while Greek bonds are the best performing sovereign securities tracked by Bloomberg’s World Bond Indexes over the same period amid optimism an agreement may be within reach.

‘Final Stretch’

That message was reinforced by Greek Finance Minister Yanis Varoufakis and Tsipras, who said on Monday that negotiations to unlock aid are in the “final stretch.”

All the same, while officials such as Jeroen Dijsselbloem, who chairs meetings of euro-area finance ministers, testify to progress being made to resolve the deadlock, it remains slow. International Monetary Fund Managing Director Christine Lagarde said the situation remains “difficult.”

“There’s still a lot of work to be done,” EU Commission Vice President Valdis Dombrovskis said in an interview.

“Time is pressing,” Hollande said in Berlin. “Not just because of the May date, but because Greece has needs it must meet, financing it must find.”

Riga Talks

Euro-area finance ministers agreed in February to seek an agreement on an aid program for Greece, including reform commitments by Tsipras’s government, by the end of May, since a four-month extension of the country’s bailout expires at the end of June, Merkel said.

Hollande said “we’ll have an opportunity to talk with Mr. Tsipras,” during the summit of EU leaders in Riga that begins Thursday. Merkel also said she’s ready to meet Tsipras, who took office in January on an anti-austerity platform.

“The talks certainly have to be accelerated,” Merkel said. “They’re not exactly moving too fast.”

(Source: Bloomberg)