Greece, Creditors Still Far Away From Debt Agreement – Economist

Dimitris Vayanos, head of the financial department at the London School of Economics, thinks an agreement on Greece's debt is unlikely in the short term. The Greek government needs to make significant concessions to creditors to reach the deal, he added.

The possibility of Greece quitting the Eurozone cannot be ruled out if Athens refuses to meet creditors’ demands, but so far the two parties have not agreed on the issue, Dimitris Vayanos, head of the financial department at the London School of Economics, told RIA Novosti.

Just one day prior, Greek Finance Minister Yanis Varoufakis said the government and the creditors were close to reaching an agreement over the country’s debt. He claimed the deal would be struck within a week.

"I think the agreement is unlikely within a week and within two weeks, so Varoufakis’ claims are baseless. The Greek government has not made yet significant concessions to the creditors. At the same time, the creditors are unlikely to continue giving money to Greece if the country refuses to meet their demands," Vayanos said.

"In order to overcome the stalemate, the Greek government needs to make some significant concessions, including the implementation and expansion of the pension and market reforms," the economist added.

According to Vayanos, finally Greece would make terms with the creditors.

"However, unfortunately, the Grexit scenario cannot be ruled out until the Greek government changes its position," Vayanos concluded.

Greece is in talks with the European Union and the International Monetary Fund to refinance the country’s 240 billion euro debt, which piled up after the country was bailed out of an imminent default in 2010 and 2012. Economists were mistaken in their forecasts that strict austerity measures would help Greece to pay credits.

The new Greek cabinet formed by the Syriza party in January insisted on a new round of negotiations on debt settlement. However, the talks between Athens and the troika of creditors have dragged on.