Sunday

27th Nov 2022

Eurozone leaders meet to break Greece deadlock

  • Greek PM Alexis Tsipras (l) welcomed by EU Council president Donald Tusk (r) before the eurozone summit in Brussels. (Photo: Consillium)

Eurozone leaders are expected to decide on the broad political lines of a Greek bailout on Monday night (22 June) while technical work will continue to assess the details of the Greek reform plan submitted Sunday night.

"The most important thing is that leaders take full responsibility for the political process to avoid the worst-case scenario," EU Council president Donald Tusk said while arriving at the euro summit.

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A meeting of euro finance ministers ended with no agreement on Monday afternoon, but the tone was more optimistic than before the weekend.

"It is a welcome step and a step in a positive direction, so I think it is also an opportunity to get that deal later this week and that is what we will work for," Eurogroup president Jeroen Dijsselbloem said at a press conference after the meeting.

The 12-page document sent by the Greek government to the creditor institutions - the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) - is better "in form and substance" than the previous proposals, an EU source said.

"It argues, it contains figures and it talks about all aspects" of the issue, the source said, adding that it is the first time the Greek government answers the creditors’ demands.

"There is convergence on fiscal targets, but we need details on concrete measures", an EU official said, citing pensions, VAT, and business taxation as areas where work is still needed.

According to sources, the Greek government made concessions on pensions reform, one of its "red lines".

Early retirements would be limited and the allowance for low pensions would be suppressed in 2018 in what would be a highly symbolic measure.

The Greek government also proposed to keep three VAT rates, at 6 percent, 13 percent, and 23 percent. Books and medecines would be taxed at 6 percent and electricity at 13 percent.

The rates for restauration and some islands were still open to discussion.

"We have to check whether the list is ok and if it will work," another EU source said.

Some measures to compensate lower revenues from VAT and pension reform were also submitted, such as cuts in the defence budget.

No special tax on wealth was included in the proposal.

The Greek proposal did not mention debt relief, one of its major demands to creditors.

The issue, which is highly political, was expected to be addressed at the euro leaders summit.

"Debt is very important for Tsipras, but it is a difficult or even a toxic issue for some leaders from a domestic point of view," one of the EU official said.

Other issues to be decided by euro leaders is the extension of the current programme, for a length going from three to nine months, and the possible use of €10.9 billion fund to finance Greece during the extension.

After Monday's Eurogroup meeting, experts will be working "all the time" at a technical level and another meeting could take place on Thursday to reach a final agreement, or prepare an agreement by EU leaders later that day if no deal is reached Monday.

Eurogroup breaks up with no agreement on Greece

Eurozone finance ministers met briefly Monday to discuss Greece but broke off without agreement. A summit on Monday evening will set the political tone for the coming days' negotiations.

Greek talks heading 'in right direction'

New reform proposals from the Greek government "go in the right direction", the EU Commission has said. Eurozone leaders will try to reach a bailout deal tonight.

Greece talks to drag into EU summit

Talks aimed at preventing a Greek default are set to drag into the EU summit, after euro ministers broke off their meeting prematurely.

Euro summit delays decision on Greek bailout

Eurozone leaders acknowledged that the latest Greek reform proposals were "a positive step", but delayed a deal until later this week and didn't discuss debt relief.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

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