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Greece submits draft bailout plan, creditors say not enough

Published:Wednesday | June 3, 2015 | 12:00 AM
Greece's Prime Minister Alexis Tsipras leads a meeting at the Education Ministry in Athens, Tuesday, June 2, 2015. Tsipras says Greece has submitted a proposal for an agreement with its creditors, as Athens seeks a deal that will to unlock desperately needed rescue money.


Greece submitted a proposal for an agreement with its bailout lenders, the country's prime minister said Tuesday, in the hope of getting desperately needed rescue money - but its creditors were quick to respond that much work remained to be done.

Alexis Tsipras said his government had made compromises in the negotiations, and that it was now up to the leaders of Europe, who are Greece's main creditors, to accept a deal or risk potentially disastrous consequences for the region.

Without the rescue loans, Greece could default on its debts this month and eventually even drop out of Europe's currency bloc, a step that would push Europe and the global economy into uncharted territory.

"It is now clear that the decision for whether they want to adapt to realism and emerge from the crisis without the division of Europe ... belongs to the political leadership of Europe," said Tsipras.

Greece and its creditors have been in a standoff for four months over what - and how deep - the country's reforms should be. Once they agree, creditors will unlock the €7.2 billion worth of loans remaining in its current bailout programme.

The bailout was due to have ended earlier this year but was extended until the end of June. If there is no deal by the end of the month and the bailout expires, those funds will no longer be available for Greece.

Tsipras said the proposal, for which he gave no specifics, was submitted Monday night to the European Central Bank, International Monetary Fund and European Commission, the EU's executive.

That same night, the leaders of Germany, France, the IMF, ECB and EC held an emergency meeting about Greece in Berlin.

But the country's creditors appeared underwhelmed by the latest proposal.

"We are nowhere near far enough," said Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurozone finance ministers' meetings known as the eurogroup and who had been kept up to date on Monday's Berlin meeting.

"Time is pressing," Dijsselbloem told Dutch network RTL. "But, to be honest, we've been saying that for three months. So far, Greece has been able to make its repayments; that is getting harder."

Greece must repay a total of about €1.6 billion (US$1.8 billion) to the IMF this month, with the first instalment of just over €300 million due Friday.

It is unclear whether the country can find the cash to make Friday's payment, though it says it intends to.

Dijsselbloem said it was almost impossible to reach a deal that would unlock the €7.2 billion in time for Friday.

"That is practically already ruled out," he said, noting that any agreement would have to be approved by Eurozone finance ministers and Athens would need to start implementing the measures before money can be disbursed.

Greece has survived without rescue loans since last summer. As cash ran out in recent weeks, it managed to repay its debts by scraping together reserves from state enterprises, including embassies abroad, hospitals and schools.

There have been suggestions Greece could seek to bundle all repayments due to the IMF this month into one payment on June 30 - an option permitted under IMF rules but rarely used. Taking that route could buy more time to secure a deal with creditors, although Athens has not publicly indicated it is considering it.

Greece's administrative reform minister, Giorgos Katrougalos, said the government intended to honour its debt commitments, and that he expected Greece and its creditors to reach an agreement soon.

"I think that we can have an agreement by the end of the week," Katrougalos told the AP in an interview.

He said Greece's creditors were preparing a counterproposal to Greece's 47-page plan.

Regarding the IMF payment due Friday, Katrougalos said there was "no question of our not meeting our obligations, because it is our political decision to do so."