German Chancellor Angela Merkel and French President Francois Hollande acknowledged "the necessity" to lower primary surplus targets during phone talks about a debt deal with Prime Minister Alexis Tsipras Wednesday, Greek sources said. The three leaders "agreed on the necessity of lower primary surplus (targets) and of an immediate solution" between Athens and its creditors to free up 7.2 billion euros ($8 billion) in frozen bailout aid in exchange for reform and austerity commitments by Greece.
The issue of primary surplus - a state's budget surplus prior to debt financing - had been a major sticking point between Greece and international creditors in concluding a deal, with Athens insisting on lower targets that would allow it to honour promises to voters to increase public spending.
The talks have been stalled for four months amid manoeuvring on both sides, and have taken on greater urgency with Greece facing a Friday deadline to repay more than 300 million euros to the International Monetary Fund. Overall cash-strapped Athens needs to repay the IMF some 1.6 billion euros this month, which has raised the spectre of Greece defaulting on its debts and possibly being forced from the eurozone if it can not obtain bailout funds to make payments.