|Alexis Tsipras, Greek prime minister, Brussels, July 7, 2015|
After over five months of chaos, a renewal of recession, the imposition of
capital controls, and an emphatic rejection of austerity in last Sunday's
referendum, the Greek government on Thursday night presented new proposals to
remain in the Euro Area, that meet most creditor demands.
a 13-page detail that was leaked to the media, there is no reference to debt
relief, nor is there in accompanying letters from the prime
minister and finance minister.
Alexis Tsipras, Greek prime minister, says in
With this proposal, the Greek people and the Greek government, confirm their
commitment to, fulfilling reforms that will ensure Greece remains a member of
the Eurozone, and ending the economic crisis. The Greek government is committed
to fully implementing this reform agenda — starting with immediate actions — as
well as to engaging constructively on the basis of this agenda, in the
negotiations for the ESM (European Stability Mechanism rescue fund) Loan."
Euclid Tsakalotos, finance minister, says in
[The proposal is]
a vision which serves our commitment to remain an integral
member of the Eurozone and respect the evolving rules of our monetary union; one
that underpins that commitment with a comprehensive set of reforms and measures
to be implemented in the areas of fiscal sustainability, financial stability,
long-term economic growth and sustainable development, and, last but not least,
reforming the public administration..."
On Thursday, Donald Tusk, European Council president
and former Polish prime minister, said that a “realistic
proposal from Athens” should be matched by “realistic proposal from creditors on
debt sustainability” while Wolfgang Schäuble, Germany's
hardline finance minister, said the possibility of some kind of debt
relief would be discussed over coming days, although he warned it may not
provide much help.
“The room for manoeuvre through debt reprofiling or restructuring is very
small,” he said.
Angela Merkel, German chancellor, ruled
out an actual debt writedown for Greece. “I have said that a classic haircut is
out of the question for me and that hasn’t changed between today and yesterday,”
On Wednesday, Jack Lew, US Treasury secretary, and Christine Lagarde,
International Monetary Fund managing director, called on European leaders to
provide debt relief to Greece.
“Greece is in a situation of acute crisis, which needs to be addressed
seriously and promptly,” Lagarde said. Getting out of that crisis would take
both reforms by Athens and a “debt restructuring,” she said.
“In the next few days what we’ll see is [whether] the parties come together
and build enough trust that Greece will take the actions that it needs to take
so that Europe will restructure the debt in a way that is more sustainable,” Lew
said in respect of the public debt of €317bn.
Athens is seeking a new 3-year bailout reported to be valued at €53.5bn in
return for fiscal adjustments of about €13bn.
The government has agreed to target a primary surplus (excluding debt
interest costs) of 3.5% of GDP by 2018; raise VAT revenues by 1% of GDP or about
€1.8bn, apply the top 23% rate to processed food, while retaining a lower-rate
for some islands; solidarity payments for the poorest pensioners are to be
abolished by December 2019, a year earlier than planned and the retirement age
will rise to 67 by 2022.
There will be higher health contributions from pensioners; the corporate tax
rate will rise 2% to 28% and the rate of the shipping tonnage tax will rise
while "special tax treatments" for the shipping industry and farmers will be
There are other tax changes, administrative reforms and the privatisation
program which was suspended last February will be subject to deadlines including
the announcement of "binding bid dates for Piraeus and Thessaloniki ports of no
later than end October 2015."
The Greek Parliament will be asked to approve the proposals today and in
Brussels the Eurogroup of finance ministers will review the situation on
Saturday ahead of
an EU leaders summit on Sunday.
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