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Last ditch talks to avoid a Greek debt default fail

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Last ditch talks to avoid a Greek debt default fail


Talks between the Greek government and representatives of the three institutions financing the country’s bailout collapsed into a dead end this weekend in Brussels.

The ΙΜF’s demand to reduce pension outlays by 1% of GDP per year (1,8 bn euros) proved a decisive sticking point as the Greek government reiterated “in no uncertain terms, that no reduction in pensions and wages or increases, through VAT, in essential goods – such as electricity – will be accepted. No recessionary measure that undermines growth – the experiment has lasted long enough.”

The Greek ministers – Nikos Pappas, Euclides Tsakalotos and the deputy Prime Minister Yannis Dragasakis – came to Brussels on Saturday and gave their revised proposals to the institutions with the aim of reaching an agreement ahead of the Eurogroup meeting which will be held on Thursday 18th June.

However, the Greek counterproposal didn’t convince the institutions and the meeting on Sunday ended within 45 minutes.

Under the institutions’ joint proposal, Greece should cut back on pensions but also save 1.8 billion euros additionally through increases in VAT.

However, Greek government sources insisted that their counter proposals could reach the target they have been asked to achieve of a surplus of 1% in 2015 and 2% in 2016, adding that “we made most of the distance and they ask for more”.

A Greek official told euronews that “this obsession for the pension cuts is politically pure as we have been committed to stop early retirement, raise the retirement age of military personnel and unify pension funds” and he repeated that “the IMF has taken such a stance on the basis of false info about the Greek pensionary system”.

The message by the Institutions was delivered on Sunday by the European Commission President’s head of Cabinet Martin Selmayr in the presence of the representatives from the ECB and the IMF and the two ministers from the Greek side.

EU Commission: Major differences still remain

The Commission made the following statement after the meeting:

“President Juncker made a last attempt this weekend to find, via personal representatives and in close liaison with Commission, ECB and IMF experts, a solution with Prime Minister Tsipras that would allow for a positive assessment in time for the Eurogroup on Thursday 18 June. While some progress was made, the talks did not succeed as there remains a significant gap between the plans of the Greek authorities and the joint requirements of Commission, ECB and IMF in the order of 0.5-1 percentage of GDP, or the equivalent of up to 2 billion of permanent fiscal measures on an annual basis. In addition, the Greek proposals remain incomplete. On this basis, further discussion will now have to take place in the Eurogroup. President Juncker remains convinced that with stronger reform efforts on the greek side and political will on all sides a solution can still be found before the end of the month”.

Greek Deputy Prime Minister: Ready to resume talks

Deputy Prime Minister Yiannis Dragasakis, said that “the Greek delegation, which is in Brussels since Saturday, submitted, as was agreed, supplementary proposals to the institutions, that fully cover the fiscal gap and primary surpluses. Proposals which pave the way for the final day that covers the three pillars: Fiscal, financial and developmental”.

He added that “Greek government’s proposals cover the fiscal gap as it is defined by the representatives of the institutions.
However they insist that the fiscal gap must be covered exclusively through pension cuts of 1% of GDP and by raising VAT also at 1% of GDP”.

“The Greek government’s delegation stands ready for completion of negotiations & securing mutually beneficial deal,” he said.

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