Greek reaction dims hope of quick debt deal

Lawmakers blast offer to raise taxes, pension and healthcare contributions

ATHENS - Greek lawmakers reacted angrily yesterday to the concessions that Athens offered in debt talks and Parliament's Deputy Speaker warned that the proposals might be rejected, puncturing optimism that a deal to pull Greece back from the abyss might be sealed quickly.

Euro zone leaders welcomed new Budget proposals from Athens on Monday as a basis for further negotiations to unlock billions of euros in frozen aid and avert a default that could trigger a Greek exit from the single currency area.

Greek Prime Minister Alexis Tsipras, who was voted into office in January on a pledge to roll back years of austerity in a country battered by recession, must keep his leftist Syriza party and his creditors onside for a deal to stick.

Outspoken Syriza lawmakers voiced outrage at Mr Tsipras' offer to raise a range of taxes as well as pension and healthcare contributions, which threaten to increase hardship on Greeks reeling from previous rounds of austerity.

"I believe this programme, as we see it... is difficult to pass by us," Deputy Parliament Speaker and Syriza lawmaker Alexis Mitropoulos told Greek Mega TV.

"The Prime Minister first has to inform our people on why we failed in the negotiation and ended up with this result."

Officials of the three institutions representing Athens' creditors - the European Commission, European Central Bank (ECB) and International Monetary Fund (IMF) - were analysing the Greek proposals intensively in Brussels to see whether the numbers add up to make Greek public finances sustainable.

The creditors may well come back and demand further savings or reform measures in the drive to clinch a deal by this evening, people familiar with the talks said.

If Parliament fails to back a deal, Mr Tsipras might be forced to call a snap election or a referendum that would prolong the uncertainty.

Athens urgently needs money to avoid defaulting on a €1.6 billion (S$2.4 billion) loan repayment due to the IMF next Tuesday.

Jitters over the risk of a default leading to capital controls have prompted savers to pull billions of euros out of Greek banks, forcing the ECB to increase emergency lending to keep them afloat.

With Greece perilously close to bankruptcy, it is unclear whether lawmakers, for all their bluster, would ultimately pull the rug from under Mr Tsipras if he secures a deal.

Opinion polls suggest most Greeks want to stay in the euro zone. Mr Tsipras can also likely count on support from opposition lawmakers, who want to secure Greece's place in the zone, even though the government says it cannot continue unless its own lawmakers back any deal it brings to Parliament.

Meanwhile, the ECB raised the ceiling on the emergency liquidity Greek banks can draw from the country's central bank for the fourth time in a week yesterday, banking sources told Reuters, declining to say by how much.

The latest increase amounted to "a bit less than €1 billion", one of the people told Reuters.

The move raises the value of the ECB's Emergency Liquidity Assistance to around €89 billion, a growing liability that is worrying many around the euro zone, particularly in Germany.

The banking sources said the decision was prompted by "the positive signal from the leaders' summit meeting" and hopes that a deal was at hand.

Greece's latest proposals to its creditors for this year and next aim to raise €8 billion, mostly through new taxes.

Still, the exact contours of a final agreement remain unclear. Eurogroup finance ministers are expected to meet to approve a reform package tonight and put it to euro zone leaders for final endorsement tomorrow.



Grexit impact on markets limited: Barclays survey

Markets buoyed by hopes of Greek resolution

A version of this article appeared in the print edition of The Straits Times on June 24, 2015, with the headline 'Greek reaction dims hope of quick debt deal'. Subscribe