Wed, Jun 24, 2015 - Page 1 News List

Greece says that it had no choice over ‘harsh’ reforms

‘STEP FORWARD’:The country’s creditors have welcomed the proposed measures, but said more were needed, ahead of a 48-hour deal deadline


Greece’s economic reforms plan includes “harsh” measures the government would not have proposed had it had a choice, a spokesman said yesterday.

The country this week offered a series of measures, including multiple tax increases, to persuade its creditors to release bailout funds and keep the country from defaulting on its debts as soon as next week.

Greek Prime Minister Alexis Tsipras has 48 hours to bring a deal with his country’s creditors to the finish line and end a five-month standoff over aid that risks splitting the eurozone.

After a day of marathon talks on Monday, leaders from Greece’s 18 fellow eurozone countries agreed that Tsipras’s government was finally getting serious about striking a deal after it submitted a set of reform measures that began to converge with the terms demanded by creditors. They agreed to step up the pace of negotiations to secure a breakthrough today that leaders can sign off at the end of the week.

The package of proposals represents “a certain step forward, but it was also said very clearly that we’re not yet where we need to be,” German Chancellor Angela Merkel told reporters in Brussels after an emergency summit on Monday night. “Hours of the most intensive deliberations lie ahead of us.”

Greek government bonds rose early yesterday, extending a rally sparked by hopes of an imminent deal after Tsipras’ government submitted new proposals addressing the areas of pensions and fiscal targets that had proven the chief barriers to a deal.

The creditors, which include other eurozone states and the IMF, have demanded reforms that aim to make Greece’s public finances sustainable and keep the country from slipping back into the bad habits of overspending that led it into its financial crisis.

However, Athens has said they are needlessly harsh for the broader economy, which has shrunk by one-quarter in the past five years, while unemployment has rocketed to 25 percent.

After a series of meetings in Brussels on Monday, European creditors said the new proposals offer a good basis to break a four-month deadlock and reach an agreement this week.

Ministers needed to make “one last push” to finalize the deal, French Minister of Finance Michel Sapin said yesterday.

Eurozone finance ministers are due to meet again this evening ahead of a European leaders’ summit that starts tomorrow.

Sapin said Greece had made new proposals.

“These are tangible elements we can work with in an efficient way to reach an agreement,” he said. “Now we have to finish the work, verify the figures, verify the measures. We need one last push [Wednesday] night so that the heads of state can sign off on the agreement. That is the time frame that seems most reasonable and that we can achieve.”

The IMF sounded less optimistic, with IMF managing director Christine Lagarde on Monday night saying that the proposals were “still short of everything that we expected.”

Additional reporting by Bloomberg

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