Greece seeks 3-year aid programme, rushes to detail reforms
Greece requested a new three-year rescue programme from its European partners yesterday and rushed to complete a detailed plan of economic reforms in time to avoid the country's descent into financial chaos.
With the banking system teetering on the edge of collapse, the government sought to reassure its European creditors that it would enact tax and pension reforms quickly in exchange for loans from Europe's bailout fund, the European Stability Mechanism.
In its formal request to tap the fund, the Greek government said it would "immediately implement a set of measures as early as the beginning of next week".
After months of fruitless negotiations with the Greek government, the sceptical European creditor states have said they want to see a detailed, cost-accounted plan of the reforms by today. That is meant to give the creditors enough time to review the plan before leaders of the European Union's 28 countries meet on Sunday in what has been termed as Greece's last chance to stay in the euro.
In the letter, the Greek government said it was aiming to be able to finance itself once the new aid programme is over in three years.
Without a deal, Greece faces an almost inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro.
Markets are holding up despite the apparent ultimatum, with many investors predicting a last-minute deal. The Stoxx 50 index closed up one per cent.
"Guarded optimism is the theme today, as the eurozone gives Greece one final deadline," said Chris Beauchamp, senior market analyst at IG in London.
Prime Minister Alexis Tsipras, addressing lawmakers at the European Parliament, said his country is seeking a deal that would bring a definitive end to his country's financial crisis. Greece has had two bailouts from its European partners and the International Monetary Fund since May 2010, totaling EU240 billion ($260 billion).