- Chris Scicluna, head of economic research at Daiwa Capital Markets
Athens has submitted belt-tightening proposals to try to unlock a new bailout package from its European creditors just two hours before a midnight deadline. The government of Greek Prime Minister Alexis Tsipras asked for a three-year bailout loan of 53.5 billion euros, in a last-minute effort to keep the country within the Euro zone. In return, Greece offered a package of reforms and spending cuts, including pension savings and tax hikes, similar to those presented by creditors last month. The proposal will be presented to the Greek Parliament later today and is set to be discussed at the European Union summit in Brussels on Sunday.
The measures submitted to European officials include tax increase on shipping companies, unifying VAT rates at 23%, including restaurants and catering, 300 million euros defence spending cuts by 2016, and phasing out solidarity grant for pensioners by 2019. The Greek government said it would use the three-year loan from the European Stability Mechanism to cover debt repayments between 2015 and 2018, mostly to the International Monetary Fund and the European Central Bank. Although reforms rejected in referendum will now be conceded, this does not mean capitulation by Tsipras, as he is demanding far more in return than was on offer in June.
© Dukascopy Bank SA