European Council President Donald Tusk yesterday said that Greece’s creditors must make a “realistic” proposal for managing the nation’s huge debt, as Athens faced a midnight deadline to submit reform plans for an international bailout.
Greece’s calls for its debt to be tackled have been backed by the IMF and US Secretary of the Treasury Jack Lew, but Germany leads a hardline group of eurozone nations that are strongly opposed.
“I just spoke with the Greek Prime Minister Alexis Tsipras. I hope that today we will receive concrete and realistic proposals of reforms from Athens,” Tusk told a joint press conference with Luxembourgian Prime Minister Xavier Bettel.
Photo: EPA
“If this happens we will also need a parallel proposal from the creditors. The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors,” Tusk added.
“Only then will we have a win-win situation,” he said.
If Greece submitted its proposals on time yesterday, they would then be examined by the “troika” of creditor institutions — the European Commission, the European Central Bank and the IMF — before going on to political leaders.
Tusk, a former Polish prime minister, has scheduled a special summit of all 28 EU members on Sunday as the final deadline for a deal to bail out Greece and keep it in the European single currency.
Tsipras has called for a reduction of Greece’s massive 320 billion euro (US$350 billion) debt montain to be part of any deal for its third international bailout since 2010.
However, Germany and many other eurozone nations reject any move to write off Greek debts, especially after Greeks in a referendum last weekend backed Tsipras’ decision to reject the creditors’ demands for further austerity.
A spokesman for the European Commission on Wednesday said that its president, Jean-Claude Juncker, earlier this week had called for debt sustainability to be part of a Greek deal “under the understanding that that would come later in October, provided that the other conditions would have been met.”
IMF managing director Christine Lagarde said on Wednesday that a new program to prop up Greece’s finances would require creditors to restructure debt in addition to the reforms Athens must make.
“The other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability,” she told a conference in Washington.
Lew made similar comments on Wednesday, saying the IMF was right to focus on the issue and that Greece’s debt “is not sustainable.”
However, German Chancellor Angela Merkel said after an emergency summit of the 19 nations that use the single currency on Tuesday that debt relief would be illegal under the EU’s treaties.
“A haircut is out of question,” she said when asked about the possibility of restructuring Greek debt.
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