Greece’s provisional agreement with creditors to avert a default started to crack as European officials said the nation’s latest proposals fell far short of what was tabled two weeks ago and Greek ministers floated the prospect of a referendum if their reforms are rejected.
The list of measures Greece’s government sent to eurozone finance ministers on Friday last week, including the idea of hiring non-professional tax collectors such as tourists, is “far” from complete and the nation probably would not receive an aid disbursement this month, Eurogroup Chairman and Dutch Finance Minister Jeroen Dijsselbloem said on Sunday.
Greece’s anti-austerity government, elected in January on a promise to renegotiate the terms of a 240 billion euro (US$260 billion) bailout, has to present detailed proposals to European creditors or risk running out of cash as soon as this month. The renewed tensions threaten to temper a rally in Greek bonds sparked by optimism over the provisional accord.
“It seems their money box is almost empty,” Dijsselbloem said.
Greece is seeking the disbursement of an outstanding aid tranche totaling about 7 billion euros. Without access to capital markets, its only sources of financing are emergency loans from the eurozone’s crisis fund and the IMF. Its banks are being kept afloat by an Emergency Liquidity Assistance lifeline, subject to approval by the European Central Bank.
“I can only say that we have money to pay salaries and pensions of public employees,” Greek Minister of Finance Yanis Varoufakis said on Sunday. “For the rest we will see.”
Varoufakis said that if the nation’s creditors raise requests which are not acceptable to the government, then the people of Greece might have to decide on how to break the deadlock. Greek Prime Minister Alexis Tsipras also signaled the referendum option is being considered.
“If we were to hold a referendum tomorrow with the question: ‘Do you want your dignity or a continuation of this unworthy policy?’ everyone would choose dignity regardless of difficulties that would accompany that decision,” Tsipras told Der Spiegel news magazine, in an interview published on Saturday.
Tsipras is walking a tightrope between sticking to his election pledges, which found resonance in a nation with a 26 percent unemployment rate, and avoiding default and a possible exit from the eurozone. Some of his post-election glow is starting to fade, one opinion poll showed.
A survey published in the Efimerida Ton Syntakton newspaper on Saturday showed that 64 percent of Greeks had a positive opinion of the government, down from 83.6 percent last month.
“Maintaining the unity of the anti-bailout coalition, while striking a deal which would ease the immense pressure on the economy, is proving to be almost a ‘Mission Impossible,’” said George Pagoulatos, a professor of European politics and economy at the Athens University of Economics and Business.
The Tsipras administration on Friday last week sent a set of commitments to Dijsselbloem in the hope that the policy proposals would pave the way for the disbursement of aid.
Two officials representing creditor institutions said the proposals, which include tackling tax avoidance through non-professional inspectors and equipping citizens with chipped smart cards, are not enough to unlock bailout funds. The plans are amateurish and do not signal substantial progress toward meeting the commitments it made on Feb. 20, they said, asking not to be identified as negotiations are private.
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