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September 26, 2017

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Germany, IMF deny agreeing on Greece extension deal

ATHENS -- Greek Finance Minister Yannis Stournaras told parliament on Wednesday that the troika had granted a long-sought extension for Greece to meet its fiscal goals.

But officials at both the European Union and the International Monetary Fund were quick to make it clear that the troika had not yet reached any agreement with Athens.

"Substantial progress has been made in talks with Greece but a few outstanding issues remain before a staff-level agreement can be reached," a spokesman for European economic affairs commissioner Olli Rehn said in a tweet.

The International Monetary Fund issued a similar message soon after.

"There has been progress in recent days, but some outstanding issues remain to be agreed upon to reach full staff-level agreement," a spokesman said.

A two-year delay is expected require an additional 15 to 18 billion euros, according to Greek media, which Greece's European partners will need to find as the IMF has refused to increase its commitment.

A Greek finance ministry source on Thursday said the two-year extension has been "effectively" accepted by the troika as the "working scenario".

That means the fiscal adjustment sought by the creditors will be spread out over four years instead of two, which the Greek government has argued will help the country's economy stabilize and return to growth faster.

Greece will Stand by Reform: Finance Minister

Greece will stand by extra reform efforts thrashed out with international creditors, the finance minister said on Thursday amid new talks to overcome last-minute opposition within the government.

Against a background of uncertainty over a two-year extension to meet its fiscal targets, Stournaras said the government was "pressing on" and that the measures would be introduced in parliament next week.

"We do not have any more room (for delay)," said Stournaras, who briefly visited hospital earlier in the day and was diagnosed with fatigue and a viral infection.

The minister said Greece's representative to a preparatory Eurogroup meeting later in the day had been instructed to say that a deal will be reached.

Prime Minister Antonis Samaras "is confident that all (government) lawmakers will give their consent, especially lawmakers of the caliber of Fotis Kouvelis," said Stournaras, referring to the junior coalition member opposing the labor cuts.

The government has been trying for months to finalize a 13.5-billion-euro (US$17.5 billion) austerity package in negotiations with a mission from the EU, the IMF and the European Central Bank, the so-called "troika" of creditors.

Although the bulk of the package has been agreed, there is opposition within the three-party government coalition to additional labor reforms demanded by the troika beyond agreed cuts to salaries and pensions and a new hike in the retirement age.

Kouvelis' moderate Democratic Left party, continues to oppose cuts to severance pay and measures to facilitate layoffs at a time of rampant unemployment, arguing that the benefits to the state budget will be minimal as it will have to pay more jobless benefits.

A number of lawmakers from the third coalition partner, the Pasok socialists, are also believed to oppose these measures.

"It would not be nice for one of these parties to not join this agreement," the finance minister said.

"This is the only obstacle to an agreement," Stournaras said, referring to the objections from the Democratic Left party.

The moderate leftists have called an emergency meeting Thursday evening.

Stournaras was also to meet with senior socialist officials to persuade them to back the new round of spending cuts and reforms required for Greece to unlock a 31.2-billion-euro installment of rescue loans.

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