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    April 24

  • 12:48 PM

Greece sends reform plan to EU, sets parliament vote


Added 09 July 2015


Greek Prime Minister Alexis Tsipras. (FP)

ATHENS/FRANKFURT – The Greek government sent a package of reform proposals to its euro zone creditors on Thursday in a race to win new funds to avert bankruptcy and will seek a parliamentary vote on Friday to endorse immediate actions.

The chairman of Eurogroup finance ministers, Jeroen Dijsselbloem, confirmed receiving the documents and said through a spokesman that he would not comment until they had been assessed by experts from the European Commission, European Central Bank and International Monetary Fund.

A Greek official said lawmakers would be asked to authorise the leftist government to negotiate a list of "prior actions" it would take before any fresh aid funds are disbursed, a key step to convince sceptical lenders of its serious intent.

Leftist Prime Minister Alexis Tsipras spent the day with his cabinet drafting a last-ditch package of tax rises, pension reforms and economic liberalisation measures on which Greece's survival in the euro zone hinges.

A further vote would be needed to turn them into law next week if euro zone leaders agree at a summit on Sunday that the proposals are a basis for starting negotiations on a three-year loan and releasing some bridging funds to keep Greece afloat.

Greek banks have been closed since June 29, when capital controls were imposed and cash withdrawals rationed after the collapse of previous bailout talks. Greece defaulted on an IMF loan repayment the following day and now faces a critical July 20 bond redemption to the ECB, which it cannot make without aid.

The country has had two bailouts worth 240 billion euros from the euro zone and the International Monetary Fund since 2010, but its economy has shrunk by a quarter, unemployment is more than 25 percent and one in two young people is out of work.

Germany, Athens biggest creditor, meanwhile made a small concession by acknowledging that Greece will need some debt restructuring as part of the new program to make its public finances viable in the medium-term.

The admission by hardline German Finance Minister Wolfgang Schaeuble came hours before the midnight deadline for Athens to submit its reform plan.

Schaeuble, who makes no secret of his doubts about Greece's fitness to remain in the currency area, told a conference in Frankfurt: "Debt sustainability is not feasible without a haircut and I think the IMF is correct in saying that.

But he added: "There cannot be a haircut because it would infringe the system of the European Union."

He offered no solution to the conundrum, which implied that Greece's debt problem might not be soluble within the euro zone.

But he did say there was limited scope for "re-profiling" Greek debt by extending loan maturities, shaving interest rates and lengthening a moratorium on debt service payments.

Schaeuble also complained that he had not seen any sign of "prior actions" by the Greek government. Friday's vote should go some way towards disarming such criticism, although a further vote will be required to turn the "prior actions" into law next week if an agreement is reached, the Greek official said.

European Council President Donald Tusk, who will chair an emergency euro zone summit on Sunday to decide Greece's fate, joined growing international calls for Athens to be granted some form of debt relief as part of any new loan deal.

Tusk said a realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors.

"Otherwise, we will continue the lethargic dance we have been dancing for the past five months," he said. (Reuters)


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