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In a report dated 2 April, Deutsche Bank stresses that time is running out on Greece, and decisions should soon be taken. The report says all options are open.

The bank points out that the seven-day summit in Brussels triggered the resumption of negotiations and the Greek government promised to present a list of reforms within a few days. But, according to Deutsche Bank, progress has been sluggish.

Firstly, negotiations were torturous, because the list to be approved is not just a set of measures, but a fully-fledged contract. Secondly, the negotiations are still experiencing procedural problems. Publications have maintained that the creditors’ representatives in Athens have been struggling to arrange meetings with ministerial technical teams and verify data.

The three hurdles in the negotiations

As claimed by Deutsche Bank, according to European sources, there is a wide gap between the two parties, and it is created by three main issues:

First off, the government offers a revival of the collective bargaining and a repeal of employment-related laws adopted by previous governments.

Second, the privatisation objectives have been pared down, with the liberalisation of the energy market and the privatisation of the state electricity company DEI shaping up as the biggest obstacles.

Third, and most important, the parties don't see eye to eye on the financial objectives and deficit for 2015. The Greek government has projected a primary budget surplus of over 1%, whereas the institutions foresee a deficit due to the sharp deterioration in growth prospects.

Deutsche Bank analysts believe that the track the government should follow has not changed since last month. An agreement must be reached with the institutions on all mentioned issues. This agreement will have to be approved by the Eurogroup finance ministers, and some of the measures ought to get through the Greek Parliament, before any tranche sets sail for Greece.

The lack of liquidity ratchets up the pressure for a solution

The current liquidity bind is the strongest factor influencing the negotiations.

Next week, Greece should pay €440 million to the IMF. In the second week of April, another €200 million should go into sovereign bonds and domestic government spending.

How will negotiations end up?

The Bank sees several options for the wrap-up of negotiations:

a) With an agreement possibly necessitating a change in the government coalition if it were to pass through parliament.

b) With a referendum, which the government will accept reluctantly, but at the end of the day will find support from most of the parties.

c) With suspension of talks for lack of progress. This will most likely entail Greece’s inability to pay its debt to the IMF or the private sector.