Eurozone finance ministers today set a two-month countdown to agree Greece's high-wire exit from eight years of bailout programmes with divisions deep over how much debt relief Athens needs.
Mario Centeno, the head of the Eurogroup, said reform efforts were still required from Greece before it could end its massive rescue programme as expected on August 20.
Greece has been at the mercy of three bailout programmes since 2010 when its public finances collapsed, pushing the country into a deep economic depression and bringing crisis to the eurozone.
Athens has yet to rubberstamp its last reforms, including a round of controversial privatisations, with eurozone ministers demanding full delivery ahead of ministerial talks in Luxembourg on June 21.
"On the basis of a successful review, the Eurogroup will decide in June all the elements that can help facilitate the exit of Greece from the programme by August," said Centeno, who is also Portuguese finance mister.
Ministers meeting in Sofia did not get down to the thorny issue of debt relief, but EU Economic Affairs Commissioner Pierre Moscovici said "we of course need to reach an agreement on a strong set of commitments to ease Greece's debt burden."
The topic of debt relief is hugely sensitive with Greece's debt to European taxpayers standing at nearly 180 per cent of annual output, a level that many fear is unsustainable.
But powerful Germany, Greece's biggest creditor, is extremely reluctant to pare down the pile and will demand that Greece meet strict targets even after the bailout as a condition.
Opposite the hardliners, which also includes the Netherlands and other northern eurozone countries, are France and the European Central Bank, which argue that reduced debt is crucial in order for Greece to gain the trust of the markets.
France has proposed that debt relief be tied to economic growth, where Greece would see its debt rates automatically reduced in tough times and set higher in the good ones.
"The more automatic they can be, the less conditional they can be, the more they can contribute to the confidence building exercise (for investors)," ECB board member Benoit Coeure told a news conference in Sofia.
Whichever option is finally chosen, Athens, which has pledged to implement reforms even after it has left the aid programme, will be monitored very closely in order to avert yet another rescue.
In order to give Greece an 18-month cushion, eurozone officials said creditors were considering a 10 to 12 billion euro cash buffer as a goodbye handshake for Athens.
That figure will likely raise hackles in Berlin and heap pressure on Athens to deliver swiftly on its last round of bailout reforms.
"The next two months will be very intense," said Klaus Regling, the eurozone's rescue fund chief.
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