Greece submits new bailout plan to avoid euro exit

GMT 03:08 2015 Friday ,10 July

Arab Today, arab today Greece submits new bailout plan to avoid euro exit

Ordinary Greeks are panicking over the realisation
Brussels - AFP

Greece early Friday laid out details of a new bailout plan to save it from the brink of financial collapse, offering a pensions overhaul and tax hikes in return for debt relief and a rescue loan from the eurozone.

The last-ditch package, handed in just two hours before a crucial deadline of midnight (2200 GMT) Thursday, closely resembled an offer put forward by Greece's international paymasters before talks broke down last month, but there was no immediate word on whether it would be enough to unlock fresh aid.

"The Greek proposal... includes funding of the country's financing needs... for three years, debt adjustment and a front-loaded investment package of 35 billion euros ($38 billion)," a Greek government source said.

Eurozone officials will now study the details of the plan on Saturday before a make-or-break summit of all 28 European Union leaders the following day that could determine Greece's future in the single currency and even the bloc as a whole.
The summit comes a week after Greeks overwhelmingly voted to reject a fresh bailout package offered by the country's creditor institutions -- the European Commission, the European Central Bank and the International Monetary Fund -- in return for new tax rises and spending cuts.

The final crescendo of Greece's long-running debt crisis forced the country's banks to close last month, bringing the economy to a standstill, while a ban on transferring money out of the country has isolated Greece from foreign suppliers of everything from food to medicine.

On Friday, the Greek parliament will be asked to authorise Prime Minister Alexis Tsipras and other senior officials to hold new talks on the basis of this latest bailout offer, state news agency ANA said.

The premier could face a challenge from hardliners in his Syriza party who reject any austerity no matter the cost.

- New plans -

Under the new proposals Greece's leftist government, which swept to power in January promising to end years of painful austerity demanded under previous bailouts, agrees to creditors' demands to discourage early retirement and seek higher health contributions from pensioners.
Tax on shipping, corporate tax and a luxury tax will be increased and a crackdown will be energetically pursued against tax evasion, according to a 13-page document released by Athens in the early hours of Friday.

In it Greece also pledged to raise sales tax revenue by 1.0 percent of gross domestic product (GDP), sell the state's remaining shares in telecoms giant OTE and commit to privatising the ports of Piraeus and Thessaloniki no later than October.

But Athens also warned the primary surplus targets it had already agreed with its debtors -- one percent of GDP this year, followed by 2.0 percent in 2016 and 3.0 percent in 2017 -- would have to be revised because of worsening economic conditions.

Instead of abolishing a 30 percent tax break on all its islands, as requested by its creditors, the government said for now it will only scrap the measure on the wealthiest islands and those most popular with tourists.

And, whereas the creditors had demanded a 400-million-euro reduction in military spending, Athens is offering to cut 100 million this year and 200 million in 2016.

- Greeks want the euro -
But on the streets, ordinary Greeks were panicking over the realisation that, by voting to reject austerity in last Sunday's vote, they brought their country to the brink of a messy exit from the euro, a so-called "Grexit".

"I voted 'No' but I am for Greece staying in the eurozone," said Viviane, a worried 46-year-old secretary in an Athens lawyer's office, echoing a view held by many.

"I want an agreement and no matter if it contains austerity measures -- that is still better than going back to the drachma," sighed Stefanos, an unemployed 32-year-old.

The new bailout is the third Greece will have asked for since its debt crisis erupted five years ago.

It has already received 240 billion euros in loans from the two previous EU-IMF rescues, the last of which expired on June 30. In 2012, creditors also forgave 107 billion euros of its debt.

But all that has proved insufficient, with Greece struggling through a depression that has shrunk its output by a quarter and sent unemployment rocketing to 26 percent.

Still, Greece faces has an uphill battle to convince most of the eurozone nations.

Germany, the Netherlands and several Nordic and eastern European states are hostile to another rescue and want to see Greece stick to reforms it has rejected, on taxes and pensions, before it talks of debt relief.

"I have said that a classic 'haircut' is out of the question for me and that hasn't changed between the day before yesterday and today," German Chancellor Angela Merkel told reporters on a visit to Sarajevo.

German Finance Minister Wolfgang Schaeuble, also on Thursday, conceded that IMF chief Christine Lagarde was correct when she said Greece was in need of some debt restructuring.

But he was quick to add: "There cannot be a haircut because it would infringe on the system of the European Union and after all the European Union is a community of common laws."


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