Greek PM to present new debt plan

Jul 07, 2015

 

Greek Prime Minister Alexis Tsipras is expected to present new proposals at a eurozone emergency summit on his country’s growing debt crisis.

The plan is said to include a demand for Greece’s debt to be cut by up to 30%, after voters rejected the terms of an international bailout on Sunday.

Athens has been urged to make "serious" proposals as Greece risks defaulting on its €323bn ($356bn; £228bn) debt.

Greece’s banks are to stay closed on Tuesday and Wednesday.

The European Central Bank (ECB) is maintaining its pressure on Greek banks, refusing to increase emergency lending and ordering them to provide more security for existing emergency loans.

Nervous and worried

Eurozone finance ministers will meet in Brussels later on Tuesday before a full summit of eurozone leaders.

Mr Tsipras may be prepared to accept many of the demands made by Greece’s creditors, the BBC’s Chris Morris in Athens reports.

But - emboldened by his resounding win in the referendum - Mr Tsipras also wants changes and substantial debt relief, our correspondent says.

Central to any negotiations will be new Greek Finance Minister Euclid Tsakalotos, who replaced outspoken Yanis Varoufakis on Monday.

Mr Tsakalotos has admitted he is nervous and worried about the crisis, but said Greece deserved a better deal.

However, Germany earlier warned against any unconditional write-off of Greece’s debt, saying it would destroy the single currency.

"I really hope that the Greek government - if it wants to enter negotiations again - will accept that the other 18 member states of the euro can’t just go along with an unconditional haircut [debt write-off]," said German Economy Minister Sigmar Gabriel.

What are the scenarios for Greece?

 

Meanwhile, the ECB said it would keep emergency cash support for Greek banks, which are running out of funds and on the verge of collapse, at the same level - refusing requests for additional support.

It told the banks to lodge more collateral - or assets - with the Bank of Greece, reducing the amount of spare cash the banks have.

Greece’s Economy Minister, Georgios Stathakis, had earlier told the BBC that the ECB had to keep Greek banks alive for seven to 10 days so that negotiations could take place.

Last week, Greece ordered banks to close after the ECB froze its financial lifeline following the breakdown of bailout talks in Brussels.

Capital controls have been imposed, with people unable to withdraw more than €60 a day from cash points.

Analysis: Chris Morris, BBC News, Athens

With pressure growing on the Greek banking system, the eurozone summit will have to give a pretty clear signal that it thinks progress can be made.

But the two most important leaders in the eurozone, Angela Merkel and Francois Hollande, appear to be struggling to find a common position on Greece in the wake of Sunday’s "No" vote.

Broadly speaking, some countries - led by France - are pushing for a deal that will give Greece some breathing space to stay in the eurozone.

Others - led by Germany - are under greater political pressure at home, and wonder whether such a deal is possible.

It all leaves Greece in the most precarious position it has experienced in five years of wrenching economic crisis. The best that can be said is that it could go either way.

On Monday, French President Francois Hollande and German Chancellor Angela Merkel said the door was still open for debt negotiations.

"It is now up to the government of Alexis Tsipras to make serious, credible proposals so that this willingness to stay in the eurozone can translate into a lasting programme," Mr Hollande said.

Mrs Merkel added that Mr Tsipras should offer "precise suggestions... for a medium-term programme that will lead Greece to prosperity and growth again".

Greece’s last bailout expired last Tuesday and Greece missed a €1.6bn payment to the IMF.

The European Commission - one of the "troika" of creditors along with the IMF and the ECB - wanted Athens to raise taxes and slash welfare spending to meet its debt obligations.

Greece’s Syriza-led left-wing government, which was elected in January on an anti-austerity platform, said creditors had tried to use fear to put pressure on Greeks.

Source: BBC News