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BNP out with a piece on the Greek negotiations with the eurozone:

• Negotiations have ground to a halt
• The Greek government has until 20 April to present economic and fiscal reforms
• Eurogroup meeting of finance ministers on 24 April
• Recent comments by EU officials suggest an imminent deal to unlock the last tranche of Greece's bailout funds still looks unlikely
• The Eurogroup meeting on 11 May is now being touted as the date of a potential deal on Greece
• Greece facing about EUR 0.2bn in interest payments to the IMF on 1 May and a EUR 0.8bn IMF loan redemption on 12 May
• We continue to expect the Greeks to make a last-minute U-turn to secure a deal in the not-too distant future

"Greek Prime Minister Alexis Tsipras needs to strike a delicate balance between the political lines that his party, Syriza, will not cross (such as further cuts in pensions and the liberalisation of the labour market) and the demands of his European counterparts. It may be that his strategy is to reject eurozone demands until the very last minute to demonstrate to the far-left wing of his party that he did all he could, but he has to strike a deal to avoid default".

But ...

• it is impossible to rule out a worst-case scenario in which a deal is not reached ... Greece does not pay the IMF and the Greek government decides to hold a referendum on the terms of an EU bailout and/or membership of currency union
• If the outcome of a referendum were positive (ie, with the majority of Greeks agreeing to the terms of a bailout deal and/or a continuation of euro membership), this could potentially help Mr Tsipras to reshape Syriza, or form a coalition with pro-European, reform-friendly parties, such as Pasok or To Potami
• This would be positive for the country's future relationship with the EU, but the implications of capital controls for sentiment and growth would be negative, at least in the short term, creating new problems, such as even greater funding needs.

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