Greece meets deadline for reform plan, setting off mad rush to avert financial ruin
Greece has met a crucial deadline to make a series of sweeping proposals that its creditors needed by midnight Thursday, setting off a mad rush toward a weekend deal to stave off a financial collapse of the nation.
The package met longstanding demands by creditors to impose wide-ranging sales-tax hikes and cuts in state spending for pensions that the left-leaning Greek government had long resisted.
It raised hopes that Greece can get the rescue deal that will prevent a catastrophic exit from the euro after key creditors said they were open to discussing how to ease the country’s debt load, a long-time sticking point in their talks.
In the text of proposals sent by Athens late Thursday, the government conceded to demands it had previously refused to accept — mostly on moving various categories of goods and services to higher sales tax rates — in exchange for a new 53.5 billion-euro (HK$458 billion) bailout package.
After months of foot-dragging despite impending chaos, Greek Prime Minister Alexis Tsipras met a midnight deadline with more than an hour to spare. The spokesman for eurogroup President Jeroen Dijsselbloem tweeted that it was “important for institutions to consider these (proposals) in their assessment” of the Greek situation.
Finance officials from the European institutions and the International Monetary Fund were to fine-comb through the proposals today before the 19 eurozone finance ministers assess them on Saturday.In ideal circumstances, a summit of the full European Union would be able to approve them on Sunday.
Earlier Thursday, Donald Tusk of Poland, who chairs the EU summits, indicated that European officials would make an effort to address Greece’s key request for debt relief.
“The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation,” Tusk said.
On Thursday, German Finance Minister Wolfgang Schaeuble said the possibility of some kind of debt relief would be discussed over coming days, though he cautioned it may not provide much help.
“The room for manoeuvre through debt reprofiling or restructuring is very small,” he said.
Making Greece’s debt more sustainable would likely involve lowering the interest rates and extending the repayment dates on its bailout loans. Germany and many other European countries rule out an outright debt cut, arguing it would be illegal under European treaties.
Tsipras met with finance ministry officials and his cabinet throughout the day Thursday to finalise his country’s plan, a day after his government requested a new three-year aid program from Europe’s bailout fund and promised to immediately enact reforms, including to taxes and pensions, in return.
The last-minute manoeuvres come as Greece’s financial system teeters on the brink of collapse. It has imposed restrictions on banking transactions since June 29, limiting cash withdrawals to 60 euros per day to stanch a bank run. Banks and the stock market have been shut for just as long.
