Greece has until midnight tonight (July 9) to deliver what its Prime Minister Alexis Tsipras has promised will be credible reform plans, in order to secure a future in the euro and stave off financial collapse.
After a mixed response to his appearance at the European Parliament, the premier knows he must capitulate to creditor demands for cuts and tax rises, but he’s still hoping to include a mention of debt relief.
On returning to Athens, Greek President Propokis Pavlopoulos commented that it had become clear to Strasbourg that the verdict of the Greek people in the referendum is not to be interpreted as a breach but as a restart of negotiations with one goal – the participation of Greece in Europe and the eurozone.
Although some of Greece’s creditors including Germany are resisting restructuring the debt, IMF chief Christine Lagarde, appears to disagree:
“We have always advised that a programme walks on two legs, if you will. One leg is about significant reforms and fiscal consolidation. And the other leg is debt restructuring, which we believe is needed in the particular case of Greece for it to have debt sustainability,” said Lagarde.
Since 2010, the Athens government has been reliant on two EU-IMF bailouts totalling €240bn. Greece’s last cash injection from international creditors was back in August 2014, and when the eurozone agreement ran out on 30 June, Alexis Tsipras’s government also failed to make a key debt repayment to the IMF of €1.5bn.
The new reform plans need to be submitted in time for Eurogroup ministers to consider them before a full European Union summit on Sunday (July 12).
In the meantime in a reflection of how critical the situation has become, Greek banks are to stay shut until next week, continuing a €60 daily limit on ATM withdrawals until Monday.