Roundup: No clear solution to tackle Greek debt saga after EU summit in Riga

As the curtains fell on the latest EU summit in Riga on Friday, Greek Prime Minister Alexis Tsipras and other government officials expressed optimism that a reform-for-cash deal with international creditors was imminent by June to avert a credit event. Other European officials did not appear so upbeat, urging for acceleration of efforts.

According to analysts in Athens, the country will have to repay its next loan installment to International Monetary Fund most likely on June 5.

Greek ruling party officials have openly said lately that the government cannot make it without international aid. Tsipras and his close aides appear confident that the dangerous four-month stalemate in negotiations with lenders will have been resolved by then.

"I am optimistic that we can soon reach a viable solution," the Leftist Greek leader said on Friday after another round of talks with German Chancellor Angela Merkel and French President Francois Hollande on the sidelines of the Riga summit on Thursday night.

"The conditions have matured to strike a deal within May," Greek government spokesman Gavriil Sakellaridis told Greek media.

Athens insists that a first deal can be achieved soon to allow the European Central Bank to ease the liquidity squeeze on Greek economy and push away risks until a "final comprehensive mutually beneficial compromise agreement that will give a clear solution to the Greek debt load" is reached later this summer.

However, Merkel, Hollande and other European officials once again dashed Tsipras' hopes for a vague political settlement instead of a technical agreement with precise, detailed pledges in exchange of further vital aid. They urged for more work with the EU institutions to successfully complete the old bailout program that was extended to June before any other topic is discussed.

Despite "substantial progress," there were no signs of a breakthrough to unlock aid for Greece, as differences between the two sides remain on key topics such as targets for a primary budget surplus, pension and labor reforms.

Four months after the change in government in Athens and the start of talks on the formula of future cooperation with creditors, the Greek government continues without success to realize its pre-election promises for an outright reversal of austerity policies, a write-down of the Greek debt and a new start, analysts in Athens noted.

The government blames EU interlocutors of holding an "irrationally hard line." The Greek economy in the meantime is suffering the consequences of prolonged uncertainty, as state coffers run dry and time runs out for a deal.

"We are reaching crunch time. Along the way we lost friends, we burnt bridges," according to Alexis Papachelas, executive editor of "Kathimerini" (Daily) newspaper.

As ruling party hardliners call for a clash with lenders should negotiations fail, Papachelas said that the Greek prime minister should put aside personal ideals and decades-old friendships and make a decision to determine the future of an entire country.

"It is time for the major turn. Instead of constructing internal enemies, the government must focus more on developing a concise and internally consistent plan for growth and exiting the crisis," Antonis Karakousis, Managing Editor of "Vima" (Tribune) daily added.

Latest official data from Greece's national statistics authority ELSTAT released earlier in May showed that the Greek economy returned to recession in the first trimester, after a brief exit in 2014 following six years of recession.

According to the General State Accounting Office the general government debt fell to about 312 billion euros (348.22 billion U.S. dollars) from 324 billion euros in December 2014, after the bank bailout fund returned over 11 billion euros left over from the recapitalization process to the European Central Bank.

But Greece's cash reserves dropped to approximately 796 million euros at the end of the first quarter, as the government struggled to pay pensions, salaries of public servants and in parallel meet obligations to lenders to avoid a default and a possible Grexit.

Each day passing with no deal in sight this year costs the Greek economy 22.3 million euros from its GDP, 59 closures of small and medium enterprises and 613 job positions on average, according to estimates released this week by the Hellenic Confederation of Commerce and Enterprises.

Credit rating agency Moody's which further downgraded Greek economy's long-term credit rating to Caa2 from Caa1 with a negative outlook in late April, warned this week that Greece faced the danger of "imposition of capital controls and deposit freeze" in coming months, should there be no drastic improvement of the situation of the banking system soon.

According to official estimates, since December 2014 more than 30 billion euros have been withdrawn by Greek banks. The liquidity shortage has skyrocketed as nine out of 10 applications for loans are rejected.

The Association of Hellenic Tourism Enterprises (SETE) also warned this week that the prolonged uncertainty has already affected the tourism industry which greatly helped Greek economy in recent years. Arrivals fell in top tourism destinations in April by 31 percent in Mykonos to 7 percent in Crete.

Plans for an increase in value-added tax next year would worsen the picture, resulting in at least a 2 percent contraction of GDP and 200,000 lost jobs over the next five years, the association said.

The only way forward for Tsipras, Karakoussis said, was to urgently restore the trust of Greece's interlocutors and foreign investors and reach a deal on time to avoid an "accident" in June.

They urged Tsipras to implement a realistic plan that will include long-needed reforms to tackle the crisis.

"The extension of the uncertainty will be catastrophic for the economy. There is no more room for another impasse," an editorial in Vima underlined. The alternative -- risking a default -- would be undoubtedly a Greek tragedy. Endit