German Finance Minister Wolfgang Schaeuble has told Reuters the Greek government’s optimism about clinching a cash-for-reforms deal with its lenders within days is not backed up by the negotiations, and he cannot rule out Greece becoming insolvent.
Greek Finance Minister Yanis Varoufakis said on Monday that an agreement could be reached within a week.
But Schaeuble said reports from the International Monetary Fund, the European Central Bank and the European Commission on their negotiations with Athens suggested talks were progressing “very hesitantly”.
“What I know from discussions with the three institutions does not back up the optimism arising from announcements from Athens,” Schaeuble said in an interview on Wednesday.
“There is not yet any substance to the mere announcement that we are closer to an agreement. This is still within the realms of atmosphere.”
Both Greece’s European Union and IMF lenders have said talks are moving too slowly for a deal in the coming days.
Asked whether he thought Greece was coming ever closer to insolvency, Schaeuble said the situation was in Athens’ hands, adding: “I can’t rule anything out, in any case.”
In the latest warning that Greece is teetering on the brink of default, a senior Greek ruling party lawmaker said on Wednesday that it could not make a payment due to the IMF on June 5 unless foreign lenders disbursed more aid.
But Schaeuble said such a payment would contravene an agreement between the Eurogroup of euro zone finance ministers and Greece on Feb. 20, when Athens was granted a four-month extension of its rescue package in return for promising economic reforms.
Schaeuble said Greece was likely to be discussed at a meeting of Group of Seven finance ministers and central bank chiefs in Dresden next week, although it was not officially on the agenda.
G7 FINANCE MINISTERS
He said the talks might also include, on an informal level, the increase in the yuan’s importance and its possible inclusion in the International Monetary Fund’s currency basket.
The participants will also discuss how to improve sustainable growth through the interplay between economic and monetary policy, as well as addressing the limits of monetary policy and how to prevent new bubbles forming, he said.