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Greek debt crisis: Country set for weeks of impasse, and burden of debt may be increasing Greek debt crisis: Alexis Tsipras tells creditors what he is prepared to do to stay in the euro
(about 2 hours later)
Greece’s government is preparing to submit detailed reform proposals to its European creditors in a final bid to secure bailout funding and avoid crashing out of the single currency. Greece’s government has submitted its reform proposals to its European creditors in a final bid to secure bailout funding and avoid crashing out of the single currency.
Athens has been told that it must present its list of commitments to a meeting of eurozone finance ministers tomorrow – or the leaders of the creditor powers will begin making preparations to deal with the aftermath of a “Grexit” on 12 July. Athens has been told that it must present its list of commitments to a meeting of eurozone finance ministers on Saturday – or the leaders of the creditor powers would begin making preparations to deal with the aftermath of a “Grexit” on Sunday.
After a four-hour meeting Greece’s cabinet approved a new plan to cut pension spending and increase VAT. The plan is likely to go before the Greek parliament. Alexis Tsipras, the Prime Minister, is reported to have told colleagues: “We are ready to compromise.” But fears are rising that Mr Tsipras’s Syriza-led coalition could implode over the fresh austerity plan. After a four-hour meeting Greece’s cabinet approved a new plan to cut pension spending and increase VAT.
The plan is likely to go before the Greek parliament on Friday. Alexis Tsipras, the Prime Minister, is reported to have told colleagues: “We are ready to compromise.” But fears are rising that Mr Tsipras’s Syriza-led coalition could implode over the fresh austerity plan.
Last week’s national referendum delivered a resounding rejection to the austerity demands from the creditors made at the end of June. Yet reports in the Greek media suggested the government is now preparing to commit to more austerity than under the previous creditors’ plan – €12bn of consolidation over two years – to fill the budget hole left by the rapidly worsening recession.Last week’s national referendum delivered a resounding rejection to the austerity demands from the creditors made at the end of June. Yet reports in the Greek media suggested the government is now preparing to commit to more austerity than under the previous creditors’ plan – €12bn of consolidation over two years – to fill the budget hole left by the rapidly worsening recession.
Panagiotis Lafazanis, the Energy Minister and leader of Syriza’s left-wing faction, was reported to have opposed the plan. “We don’t want to add to the past two failed bailouts a third bailout of tough austerity which will not give any prospects for the country” he told reporters, adding that Greece will not sign its own death warrant.Panagiotis Lafazanis, the Energy Minister and leader of Syriza’s left-wing faction, was reported to have opposed the plan. “We don’t want to add to the past two failed bailouts a third bailout of tough austerity which will not give any prospects for the country” he told reporters, adding that Greece will not sign its own death warrant.
However, there were also signs that the creditors are beginning to look more favourably on Greece’s demands for another restructuring of its national debt pile. Greece’s proposals were submitted well before tonight’s deadline, although Martin Selmayr, head of cabinet for the European Commission President, tweeted that the necessary “signed letters” had still not been received.
There were signs that the creditors are beginning to look more favourably on Greece’s demands for another restructuring of its national debt pile.
“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,” said the European Council President, Donald Tusk. “Otherwise, we will continue the lethargic dance we have been dancing for the past five months.”“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,” said the European Council President, Donald Tusk. “Otherwise, we will continue the lethargic dance we have been dancing for the past five months.”
Even the hardline German Finance Minister, Wolfgang Schäuble, said debt relief was not out of the question. But he saw little room for manoeuvre given the apparent final deadline of 12 July to reach a deal. The International Monetary Fund and the United States have also been pushing for Greece’s debt – which is equal to around 177 per cent of its GDP – to be restructured. Even the hardline German Finance Minister, Wolfgang Schäuble, said debt relief was not out of the question. But he saw little room for manoeuvre given the apparent final deadline of Sunday to reach a deal. The International Monetary Fund and the United States have also been pushing for Greece’s debt – which is equal to around 177 per cent of its GDP – to be restructured.
Creditors will be reviewing the Greek proposals tomorrow with a meeting of eurozone finance ministers. A full summit of the 28 EU leaders is planned for 12 July. If there is no agreement, the EU leaders will discuss measures to limit the damage from a Greek collapse, including humanitarian aid. Creditors will be reviewing the Greek proposals tomorrow with a meeting of eurozone finance ministers. A full summit of the 28 EU leaders is planned for Sunday. If there is no agreement, the EU leaders will discuss measures to limit the damage from a Greek collapse, including humanitarian aid.
For the owner of a busy little cafe in the heart of Athens the potential new austerity measures from the Greek government were a big concern. The potential tax hikes would just be the end of his business, he said. “It will destroy us,” said Petros who refused to give his last name. For the owner of a busy little cafe in the heart of Athens, the potential new austerity measures from the Greek government were a big concern. The potential tax hikes would just be the end of his business, he said. “It will destroy us,” said Petros who refused to give his last name.
Jens Weidmann, the president of the Bundesbank in Germany, increased the pressure on Greece’s banking system – where depositors have been unable to withdraw more than €60 a day since 6 July – by saying that doubts about the banks’ solvency was “rising by the day”. Jens Weidmann, the president of the Bundesbank in Germany, increased the pressure on Greece’s banking system – where depositors have been unable to withdraw more than €60 a day since last Monday – by saying that doubts about the banks’ solvency was “rising by the day”.
If Greece defaults on a €3.5bn bond repayment due to the European Central Bank on 20 July it is likely to see its financial system entirely cut off, forcing a nationalisation and the effective creation of a new national currency.If Greece defaults on a €3.5bn bond repayment due to the European Central Bank on 20 July it is likely to see its financial system entirely cut off, forcing a nationalisation and the effective creation of a new national currency.