Sunday

15th Sep 2019

Greece unveils reforms, says euro 'viability' at stake

  • Greece has presented plans to raise an extra €5bn in 2015. (Photo: Queenofhearts820)

The Greek government presented a revised plan to its eurozone partners on Wednesday, promising that it would fulfil its debt repayment obligations over the next two weeks.

The 26-page document, leaked to the Financial Times on Wednesday (1 April), contains a raft of tax increases aimed at boosting treasury coffers by between €4.6 billion and €6.1 billion, alongside an extra €1.1 billion in spending commitments, most of which comes from increases to state pensions. The blueprint forecasts that the Greek economy can record a primary surplus of 1.2 percent in 2015.

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In a statement attached to the proposal, which will now need approval by eurozone finance ministers, the Greek government called for “a speedy and successful conclusion to the Final Review, so that short-term funding issues can be resolved and current crippling financial and economic uncertainties brought to an end.”

It added that the “viability” of the single currency was at stake in securing an agreement.

Alexis Tsipras’ government must have a new set of economic reform proposals signed off by fellow governments in order to unlock the remaining €7.2 billion in its bailout fund. Ministers will next meet in Brussels on 24 April.

“We sent a new document today to the Brussels Group which is more specific and quantified," a Greek finance ministry official told reporters on Wednesday.

Meanwhile, the Greek treasury expects the country’s economy to grow by 1.4 percent in 2015 - down from the previous forecast of 2.9 percent - before rising to 3.7 percent in 2016.

It also includes plans to create a ‘bad bank’, named the Hellenic Financial Stability Fund, to take control of non-performing loans and restore stability to the country’s fragile banking sector which is increasingly reliant on the European Central Bank.

For its part, the ECB announced on Wednesday that it would increase the size of its emergency cash facility for Greek banks by €700 million to €71.8 billion.

The Athens government also moved quickly to distance itself from remarks made by Interior Minister Nikos Voutsis to Germany's Spiegel news magazine that Greece might default on a €450 million payment to the International Monetary Fund (IMF) due next week if it did not receive a new injection of cash from its creditors.

The Greek government puts the country's financing needs in 2015 at €19 billion. But it has sharply revised down the amount of money it expects to get from privatising more of the country’s state assets to €1.5 billion from the €4 billion envisaged by the agreement with the previous government.

Greece faces repayments of over €3 billion over the course of April, and a total of around €16 billion over the next four months to redeem treasury bills and repay loans to the ECB and IMF.

The Economist has estimated that Greece’s repayments will amount to roughly 30 percent of its economic output over the next six months.

Clock ticking as Greece continues talks with creditors

Talks between Greece and its creditors are continuing with just over a week to go before Greece is due to make a payment to the IMF and amid uncertainty over how much cash the government has left.

Greece's creditors study new reform plans

Greece's creditors are studying new reforms put forward by Athens on Friday. Meanwhile, leading centre-right German MEPs have warned Greece not to seek help from Russia.

Analysis

Greece's cash-flow crisis

The general view amongst commentators and analysts is that Greece needs an agreement with its creditors by mid-April to prevent a default.

Time running out for Greece, warns euro commissioner

Time is running out for Greece to broker a compromise that will allow it unlock the remaining €7.2 billion in its EU-IMF bailout needed to avoid a default, the bloc’s eurozone commissioner has said.

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