Thursday, June 25, 2015

Greek PM Alexis Tsipras slams creditors as hopes for bailout deal fade


Greek prime minister Alexis Tsipras has lashed out at his country's creditors ahead of critical talks in Brussels, denting hopes of a final deal to prevent Athens from defaulting and leaving the euro.

Greece's prime minister Alexis Tsipras Photo: Greece's prime minister Alexis Tsipras has expressed doubts creditors are interested in an agreement. (AFP/Louisa Gouliamaki)

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Alexis Tsipras @tsipras_eu

This odd stance seems to indicate that either there is no interest in an agreement or that special interests are being backed. #Greece (2/2)

8:32 PM - 24 Jun 2015

The anti-austerity leader flew in for a crunch meeting with the heads of the European Commission, International Monetary Fund (IMF) and European Central Bank (ECB) before Eurozone finance ministers try to thrash out an agreement.

But Athens said it had rejected last-minute changes made by its European Union (EU) and IMF creditors to an eleventh-hour reform plan submitted by Greece this week to win approval for vital bailout funds.

Hard-line Germany said there was a long way to go before any deal, while Eurozone stocks closed down over doubts that an accord will be ready for EU leaders to rubber stamp at a summit on Thursday.

"This strange position maybe hides two things, either they do not want an agreement or they are serving specific interests in Greece," Mr Tsipras said just minutes before the talks.

"The repeated rejection of equivalent measures by certain institutions never occurred before - neither in Ireland nor Portugal," he tweeted, referring to bailouts to those two countries.

Officials told AFP the talks in Brussels, which were still going on after nearly six hours, were "difficult" and "hard". The Eurozone ministers' meeting could last all night, sources added.

Greece and its creditors have been locked in a stand-off since the radical left Syriza party was elected in January, with the EU-IMF demanding reforms before unlocking the last 7.2 billion euros of Greece's bailout before it expires on June 30.

But time is running desperately short for Greece, which is set to default on a 1.5 billion euro IMF loan repayment, also due at the end of the month, if it does not get fresh funds within days.

Deal still has 'long way to go'

The new plans submitted on Sunday by Mr Tsipras's anti-austerity government aim to raise 8 billion euros, mostly through new taxes on the wealthy and businesses, value-added tax (VAT) increases and a cut in defence spending.

But in their counter-proposals, creditors are calling for early retirement to be abolished and an increase in the retirement age from 62 to 67 by 2022, not 2025.

They are sticking to demands for a 23 per cent VAT rate for restaurants, instead of the current 13 per cent.

Athens is fearful of the consequences to its valuable tourism sector.

Creditors also propose to increase the level of corporation tax to 28 per cent, instead of the Greek plan to raise it to 29 per cent from 2016 onwards. The current level is 26 per cent.

Germany insisted a deal was "unimaginable" without the IMF, believed to be behind the harshest of the measures, on board.

"Our impression is that we have a long way to go," German finance ministry spokesman Martin Jaeger said.

Eurozone stock markets closed down amid renewed concerns about a deal, with Frankfurt falling 0.62 per cent, Paris losing 0.24 per cent, Madrid 0.82 per cent lower, Milan down 0.16 per cent and Greece ending with a 1.77 per cent loss.

Greece's banking system has been kept afloat by cash injections from the ECB as wary Greeks withdraw their deposits.

On Wednesday, it increased for the fifth time in eight days emergency liquidity funds.

The Greek government meanwhile warned any accord would have to be approved by a parliamentary majority before June 30, which risks splitting Mr Tsipras' Syriza party, where many on the left wing view him as reneging on campaign promises.

Any Greek agreement would also need to deal with what comes next, with EU officials suggesting an extension of the bailout until the end of the year, followed by a possible third aid package to keep Greece afloat.

The two huge bailouts since the Greek crisis erupted in 2010 have left it with debt totalling nearly 180 per cent of its annual economic output.


From other news sites:

Greek PM Alexis Tsipras slams creditors as hopes for bailout deal fade - ABC News (Australian Broadcasting Corporation)