Greece Signals Willingness to Compromise on Bailout Deal

ATHENS—The Greek government is willing to accept a higher primary surplus target for this year to meet one of its creditors’ demands, a senior government official said ahead of a crucial meeting Wednesday among the leaders of Greece, Germany and France.

“The Greek government is willing to accept a target for primary surplus of 1% for gross domestic product under conditions,” the Greek official said.

Earlier this week, the government in Athens sent an updated draft with economic overhauls that the government was willing to accept to unlock much-needed aid. That draft called for primary surpluses—the excess of revenues over expenditures before interest payments are made—of 0.75% of gross domestic product in 2015, 1.75% in 2016, and 2.5% in 2017.

But those targets were lower than the targets presented to Greece last week in a new proposal from the commission, the European Central Bank and the IMF, the three institutions representing Greece’s creditors.

The creditor's proposal called for primary surpluses of 1% in 2015, 2% in 2016 and 3% in 2017.

Weeks of negotiations and several high-level political meetings have brought the two sides closer together on some of the terms for unlocking urgently needed aid for Athens. But the back-and-forth makes clear that fundamental differences remain over how to prevent Greece from defaulting on its debt and possibly leaving the eurozone.

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Greek Prime Minister Alexis Tsipras arrives for a summit in Brussels on Wednesday. PHOTO:ASSOCIATED PRESS

Earlier on Wednesday, German Chancellor Angela Merkel and French President François Hollande said they were willing to meet Greek Prime Minister Alexis Tsipras in Brussels on the sidelines of a European Union summit with Latin American and Caribbean leaders in a bid to jump-start stalled negotiations between Athens and its creditors.

With time running out for a deal, Greece hopes the high-level talks could end a standoff between the country and its creditors—representing the International Monetary Fund and the eurozone—over economic overhauls the country must undertake in exchange for sustained financial aid. Mr. Tsipras had hoped to use the meeting to sell his economic plan to the eurozone’s most powerful leaders, paving the way for an agreement on Greece’s international bailout.

“Where there’s a will, there’s a way,” Ms. Merkel said on her way into the summit, adding that “the necessary work needs to be done.”

“We will have a single message,” Mr. Hollande said. “This must not drag on.” Mr. Tsipras didn’t speak to reporters on his way into the summit.

The Greek prime minister will meet European Commission President Jean-Claude Juncker on Thursday, a spokeswoman for Mr. Juncker and a Greek government official said. The two men already had “a short exchange of views that was friendly” on the sidelines of Wednesday’s summit, the spokeswoman said.

Separately, the European Central Bank on Wednesday increased the amount of money Greek banks can borrow under an emergency lending program to €83 billion ($94.1 billion) from €80.7 billion—the biggest weekly increase since Feb. 18—according to a Greek bank official.

“The Greek banks still have an unused liquidity buffer of about €3 billion,” the official added.

The ECB declined to comment.

As negotiations between Athens and its creditors over its international bailout enter the final stretch, European Union officials on Tuesday dismissed the latest Greek compromise proposal, on the grounds that it didn’t go far enough in meeting its creditors’ demands.

The Greek proposal, sent late Monday, was an attempt to help bridge the gap between the country and the institutions overseeing its bailout. It called for higher primary surplus targets than Greece had originally suggested and foresaw higher revenue from sales taxes. Still, European officials said it couldn’t form the basis of a discussion.

A senior government official said the Greek government didn’t intend to submit any additional proposals during any meeting that takes place on Wednesday.

Weeks of negotiations and several high-level political meetings have brought the two sides closer together on some of the terms for unlocking urgently needed aid for Athens. But the back-and-forth makes clear that fundamental differences remain over how to prevent Greece from defaulting on its debt and possibly leaving the eurozone.

Time is running out before Athens must repay €1.6 billion ($1.81 billion) to the IMF at the end of the month. Athens’s creditors are looking for additional pension cuts and tax increases before they would be willing to extend any more funds.

Meanwhile, pressure on Greece was also raised by the European Commission on Wednesday.

EU economics commissioner Pierre Moscovici told Greek government representatives on Tuesday afternoon that their latest proposals to unlock much-needed bailout funds “do not reflect” discussions between Mr. Tsipras and Mr. Juncker, the EU spokesman said at a news conference.

“For the final push, the commission is of the view that the ball is clearly in the court of the Greek government,” the spokesman said.

The Greek premier is expected to meet European Council President Donald Tusk later Wednesday, a Greek government official said.