Greece proposed a series of new budget proposals on Monday (22 June) thus taking a one step back from the abyss. European leaders embraced the proposals hoping that they would be a basis for an eventual agreement. Donald Tusk, European Council President, who chaired an emergency summit of the Eurozone, said that Athens’ proposals were “a positive step forward”. He commented that the main objective was for now to have finance ministers give a “green light” to a cash-for-reform package today (24 June) and to have the package endorsed by Eurozone leaders tomorrow (25 June). Yet, there is still the need for a detailed deal with the European Central Bank (ECB), the International Monetary Fund (IMF) and EU governments to make sure that the numbers add up, Mr Tusk reminded.
The Greek proposals include higher welfare charges and taxes, some reductions in early retirement and wage cuts. Athens, however, avoided higher value added tax on electricity and more lenient job protection legislation. Prime Minister Tsipras said that it was now creditors’ turn to offer his country a deal that would make its debts affordable. “We are seeking a comprehensive and viable solution that will be followed by a strong growth package and at the same time render the Greek economy viable,” he commented. Athens must now pay €1.6 billion to the IMF by the end of this month or default on its debt, which would likely trigger capital controls and a bank run.
European stock markets have responded positively to the hopes of a last-minute agreement that would prevent Greece from a default and possibly also from its withdrawal from the Eurozone. European Commission President, Jean-Claude Juncker, commented that he was ” convinced that we will come to a final agreement in the course of this week”. However, German Chancellor, Angela Merkel, was far more cautious saying that she cannot give any guarantee on what will happen. “There’s still a lot of work to be done,” she said of the final deal.