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Greece offers tax hikes and pension reform in new bailout plan

July 10 2015, 10:33

Image 0Greece has submitted new bailout proposals to its eurozone creditors in a last ditch effort to unlock more funding and avoid economic collapse. The measures are more in line with lenders' demands than previous offers.

In the 13-page bailout plan, Greece on Tuesday offered to implement sweeping pension reforms and tax hikes in exchange for rescue cash.

Athens has requested funding worth 53.5 billion euros ($59 billion) to help it keep afloat over the next three years.
The proposals will be assessed by Greece's creditors - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) - before being considered by eurozone finance ministers.
A spokesman for Jeroen Dijsselbloem, head of the Eurogroup, said the proposals had been received just a few hours before Thursday's midnight deadline. Greek lawmakers are expected to vote on the package of reforms on Friday.

New concessions
Athens has been locked in negotiations with its creditors for months in an attempt to reach an agreement on how to tackle its debt. Those talks broke down last month, setting Greece on a dangerous path towards economic collapse and a possible exit from the euro.

The latest proposals submitted on Thursday include concessions the left-leaning government of Prime Minister Alexis Tsipras had previously refused to accept. For example, Athens has now offered to implement pension reforms that discourage early retirement, and ask for higher health contributions from pensioners, according to DW.COM.

The new plan pledges to raise sales tax, hike tax on shipping companies and scrap tax breaks for islands, "starting with the islands with higher incomes and which are the most popular tourist destinations," according to the document.
Greece has also given in to demands to sell the state's remaining shares in telecoms giant OTE, and set a timetable for privatizing the ports of Piraeus and Thessaloniki.

Debt restructure
In a referendum last Sunday, the Greek public voted resoundingly against austerity measures that had been put forward by the country's lenders. Amid the latest proposals, the government says it will now "seek a commitment from creditors to negotiate ... further measures to restructure the long-term debt."
German Finance Minister Wolfgang Schäuble said the possibility of some form of debt relief would be discussed in the coming days, but he warned: "The room for maneuver through debt reprofiling or restructuring is very small."
An emergency meeting of the leaders from the 28 EU countries is expected to make a final decision on the Greek bailout on Sunday.

Athens has already received 240 billion euros in two previous bailouts over the last five years - the last of which expired on June 30. The country failed to make a 1.6-billion-euro repayment to the IMF at the end of last month. It's due to make another payment of 3.5 billion euros to the ECB on July 20.

If Greece doesn't succeed in securing the extra funds from its lenders its financial system faces an almost certain collapse. In that case, EU officials say the bloc's creditors would discuss measures to limit the damage, including humanitarian aid, possible border controls and steps to mitigate the impact on neighboring countries.

Source: dw.com

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