Greece submits reform proposals to eurozone creditors - with a warning

Greece submitted a long-awaited list of structural reforms to its creditors on Friday as its leftist-led government warned it would stop meeting debt obligations if negotiations failed and aid was not forthcoming.

As officials from the EU, the European Central Bank (ECB) and the International Monetary Fund (IMF) prepared to pore over Athens’s latest proposals, the country’s international economic affairs minister, Euclid Tsakalotos, raised the stakes, saying while Greece wanted an agreement it was prepared to go its own way “in the event of a bad scenario”.

He told the Guardian: “We are working in the spirit of compromise, we want a solution, but if things don’t go well you have to bear the bad scenario in mind as well. That is the nature of negotiations.”

The government, dominated by the anti-austerity Syriza party, had assembled a package of 18 reforms in the hope of unlocking £7.2bn in financial assistance.

The desire was for a positive outcome, Tsakalotos said, but Athens’s new administration was not willing to abandon its anti-austerity philosophy. Two months after assuming office, the government’s priority remained to alleviate the plight of those worst affected by Greece’s catastrophic five-year-long crisis, he said.

The British-trained economist said: “Our top priority remains payment of salaries and pensions. If they demand a 30% cut in pensions, for example, they do not want a compromise.”

The reform-for-cash deal, the latest twist in Greece’s battle to keep bankruptcy at bay, did not - and would not - include any recessionary measures, a government official said, adding it was hoped the proposals would bolster state coffers with €3bn (£2.2bn) in badly needed revenues.

“The actions proposed though the reforms list foresee revenues of €3bn for 2015, which under no circumstances will come from wage or pension cuts,” Tsakalotos said. “The list does not include recessionary measures.”

Lenders have insisted that recessionary measures are unavoidable if the economy of Europe’s most indebted state is to be put on a sustainable path.

The 18 proposals - three times as many as put forward and dismissed by Prime Minister Alexis Tsipras’s government last month - foresaw GDP growth of 1.4% this year. The package also endorsed finance minister Yanis Varoufakis’s argument that the primary surplus demanded of Greece would have to be reduced. As such, the primary surplus was estimated to hit 1.5% in 2015 - half that in the country’s existing bailout programme.

With the country shut out of international capital markets, economists and officials have warned Athens could run out of money by 9 April, when it must pay €450m to the IMF.

“The government is not going to continue servicing public debt with its own funds if lenders do not immediately proceed with the disbursement of funds which have been put on hold since 2014,” said government aides. “The country has not taken receipt of an aid instalment from the EU or IMF since August 2014 even though it has habitually fulfilled its obligations.”

Following a precipitous decline in tax revenues, the Tsipras administration has been scrambling to raise funds, sequestering the cash reserves of state entities, raiding pension funds and postponing payments for supplies.

As negotiations between Athens and lender organisations enter a particularly fractious phase, Varoufakis responded to speculation of his imminent sacking from the government as “amusing”.

“Every time the negotiations heat up, some new rumor of my resignation, demise, etc. springs up. Somewhat amusing …” he tweeted. A government insider said the flamboyant finance minister’s enforced departure from office would be tantamount to “a self-inflicted wound”. “If he goes, it will be only when things have calmed down,” he said. A euro working group is expected to respond to the Greek reform proposals on Monday.

(Πηγή: www.theguardian.com)