10:28 | 06/08/2015 Global Economy
Greek Prime Minister Alexis Tsipras on Wednesday said his government is nearing a deal with international creditors on a mammoth bailout, as his spokeswoman raised the prospect of early elections in the fall.
"Despite the difficulties, we hope this agreement can end uncertainty over the future of Greece and the eurozone," Alexis Tsipras said
"We are in the final stretch to conclude an agreement with the institutions," Tsipras said in televised remarks. "Despite the difficulties, we hope this agreement can end uncertainty over the future of Greece and the eurozone," he added.
Greece needs a deal that will unlock bailout funds by August 20, when it must repay some 3.4 billion euros ($3.7 billion) due to the European Central Bank.
The Greek economy is also suffering from the effects of capital controls imposed at the end of June to avert a bank run, a procedure that has badly disrupted trade.
The Athens stock exchange, which opened with a record drop on Monday after a five-week shutdown, closed 2.53 percent down after losing over 4.2 percent earlier in the day. Bank shares were once again the hardest hit, trading near the maximum allowed drop of 30 percent for three straight days.
European Commission head Jean-Claude Juncker said Wednesday that an agreement on the bailout was possible by August 20.
On Wednesday the prime minister said Greeks had to "adapt to the new circumstances" but insisted that his administration would continue to negotiate with the country's creditors to secure a "fair" distribution of tax pain.
In two successive reform votes last month, more than 30 lawmakers from Syriza refused to approve the measures included in the bailout, which is worth up to 86 billion euros over three years. With his popularity among Greeks still high, Tsipras has warned the dissidents of early elections in the autumn if they continue to resist the measures.
Also on Wednesday, the European Central Bank decided to leave its emergency credit lifeline for Greek banks unchanged for the next two weeks, said a source close to the matter who asked not to be identified.
The official said the Frankfurt-based bank's executive board would maintain its Emergency Liquidity Assistance (ELA) for the country's struggling lenders at 90.5 billion euros ($98.7 billion).
Greek banks were closed for three weeks under capital controls imposed by Tsipras's government to prevent the collapse of the credit institutions. The restrictions were eased on July 20, but withdrawals and money transfers abroad remain limited.
Finance Minister Tsakalotos said the much-needed recapitalisation of Greece's banks should take place "by the end of the year"./.