Greek Reform Plan : Many Promises but Creditors Unimpressed

Written by | Wednesday, June 10th, 2015

European Union yesterday (9 June) rejected the Greek plan for further reforms. Brussels commented that the envisaged reforms were simply not sufficient to unlock another tranche of the bailout program. Athens urgently needs another injection of funding to avoid defaulting on its debts. Although Greek Prime Minister, Alexis Tsipras, has recently shown more willingness to come up with a deal that would satisfy his country’s creditors, some EU officials did not hesitate to dismiss the proposed reforms.

However, the official “no” did not come from the European Commission, which said via its chief spokesperson that it was still studying and reviewing the reform plan. The Greek plans have been rejected only a few hours after Athens said that it had submitted its suggestions to the EU. Although Finnish Finance Minister, Alexander Stubb, commented that “we will do everything to keep Greece in the Eurozone […] but our patience is running out”, other Eurozone members are growing restless. Eurozone countries have covered a bulk of Greece’s €240 billion bailout since it got into a debt crisis five years ago.

The Greek government has newly agreed to further raise value-added tax rates and propose a higher budget surplus target to appease creditors. As a result, the Greek stock market rose by a fifth in response to the expectations that a deal would be finalized soon. The current bailout program expires at the end of this month, which is why time is pressing to reach another settlement. Athens is in an urgent need for cash, without which it will be probably impossible for the Greek government to make debt repayments.

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