Greece agrees deal on economic reforms ahead of July repayment

Greek pensioners take part in a demonstration against planned pension cuts in Athens Greece

Greek pensioners take part in a demonstration against planned pension cuts in Athens Greece

Without the money, Greece would once again be facing the prospect of having to exit the eurozone - so-called Grexit.

"If the Eurogroup is not in a position to (produce a result) on Friday, I have asked EU President Donald Tusk to call a summit of eurozone countries", Tsipras said after meeting with Tusk.

Talking to reporters on his way into the Eurogroup meeting, group Chairman Jeroen Dijsselbloem said he was "in a positive mood".

The new reform package, we are told, is supposed to help Greece reach its 3.5% budget surplus target by 2018 and maintain it over the "medium term".

The government is struggling to deal with a mountain of tax arrears, as Greeks endure an eighth year of austerity measures amid progressively increasing poverty rates and falling wages.

The Greek authorities have been invited to reach a full Staff Level Agreement as soon as possible. "It is in the nature of every agreement for there to be compromises and things that will upset not generally the negotiating team but the Greek people".

The decision also has an impact on the sustainability of the Greek debt, with the International Monetary Fund insisting that it can not stay in the bailout programme if the debt is unsustainable.

In a proposed compromise discussed on Tuesday, Greece would reduce its pension outlays by 1 percent of gross domestic product in 2019 and lower its tax-free threshold in 2020 by a similar amount, according to three European Union officials with knowledge of the talks. "I hope that you will be able to find an agreement on Friday in the Eurogroup", Tusk said.

Progress appears to have been made.

"An agreement on policies will have to be followed by discussions with euro area countries to ensure satisfactory assurances on a credible strategy to restore debt sustainability, before a program is presented to the IMF Executive Board", IMF spokesman Gerry Rice said.

The impasse has held up the latest instalment of Greece's 86-billion-euro ($92 billion) bailout, agreed in 2015, which it needs for debt repayments in July.

Tsipras hinted that some lenders were "moving the goalposts" each time Greece was getting close to meeting approval conditions for the bailout and, without naming who was involved, said: "This is not a game".

The bailout talks have been delayed for months, freezing loan installment payouts and hurting chances of a Greek recovery after years of recession and flat growth. While Greece doesn't face any imminent liquidity trouble, it still has to meet the debt payments in July, while the uncertainty over its bailout weighs on the country's economy.

Greece has depended on worldwide bailouts since 2010 after it was unable to borrow on global bond markets.

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