Tsipras to submit 'credible' reform plans

Greek PM Alexis Tsipras (right) greeting a member of the European Parliament in Strasbourg yesterday as he arrived to give an address.
Greek PM Alexis Tsipras (right) greeting a member of the European Parliament in Strasbourg yesterday as he arrived to give an address.PHOTO: REUTERS

Greek PM promises to start pension and tax reforms in return for three-year loan

STRASBOURG (France) • Greece will submit "credible" reform plans to the euro zone today as demanded by leaders of the currency union at their latest emergency summit, said Greek Prime Minister Alexis Tsipras.

He also promised to start pension and tax reforms next week, as demanded by creditors, in return for a three-year euro zone loan to drag its financial system back from the brink of collapse.

The assurances came as European leaders talked openly about a Greek exit from the euro zone ahead of a weekend summit on the country's economic future, breaking dramatically with years of denial about the possibility.

Euro zone leaders had agreed to give Greece until today to submit a new reform plan after Greek voters rejected creditors' demands in a referendum.

A full European Union summit on Sunday will be the final deadline to reach a deal.

SWIFT ACTION

We propose to immediately implement a set of measures as early as the beginning of next week, including tax reform-related measures; pension-related measures.

GREEK FINANCE MINISTER EUCLID TSAKALOTOS

"The Greek government... will file new concrete proposals, credible reforms, for a fair and viable solution," Mr Tsipras told the European Parliament yesterday in Strasbourg.

Also yesterday, in a letter to the euro zone bailout fund, Greek Finance Minister Euclid Tsakalotos said: "We propose to immediately implement a set of measures as early as the beginning of next week, including tax reform-related measures; pension-related measures", if the loan from the European Stability Mechanism (ESM) was forthcoming.

However, it did not disclose the size of the loan. The ESM was set up as a lender of last resort for euro zone states in order to ensure the stability of the European single currency.

On June 30, the last bailout programme expired and Greece failed to honour a loan repayment to the International Monetary Fund (IMF), cutting it off from further IMF credit until it settles the €1.5 billion (S$2.3 billion) sum.

With its banks closed, cash withdrawals rationed and the economy in freefall, Greece has never been closer to a total state bankruptcy, which would probably force it to print an alternative currency and leave the euro zone.

But the Tsipras government's room for manoeuvre is restricted by last Sunday's referendum, which showed Greek voters overwhelmingly opposed to further cuts under the austerity terms demanded by the creditors.

To obtain the new aid, Athens must now submit a complete reform plan ahead of the Sunday EU summit, which looms as the climax of a five-year battle to contain Greece's debts.

"Our inability to find agreement may lead to the bankruptcy of Greece and the insolvency of its banking system," said EU president Donald Tusk yesterday.

Under a timetable agreed at the second emergency euro zone summit in less than two weeks yesterday, Greece will submit a formal reform programme alongside the application for a medium-term loan programme from the ESM.

If experts from the European Commission, European Central Bank and IMF deem the proposals viable, euro zone finance ministers would meet on Saturday to recommend opening negotiations with Athens, and a special summit of the 28-nation EU would meet on Sunday to approve an aid plan.

Before then, Greece is supposed to rush a first wave of reform measures through Parliament, euro zone sources said. REUTERS, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 09, 2015, with the headline 'Tsipras to submit 'credible' reform plans'. Print Edition | Subscribe