The International Monetary Fund (IMF) said Thursday that the government in Athens had asked the global lender to be allowed to pay back its debt maturing in June in a single payment to be made on June 30.
“The Greek authorities have informed the Fund today that they plan to bundle the country's four June payments into one, which is now due on June 30,” IMF spokesman Gerry Rice said in a statement.
ATHENS BUYS TIME
In his first four and a half months in office Prime Minister Alexis Tsipras is called to make one of his most important decisions.
After the failure to reach an agreement with creditors on Thursday and since the proposals of each side had been revealed the strategy to be followed by the Greek PM has changed dramatically.
Tsipras will address the Greek parliament at 6 p.m. local time on Friday, a Greek official said, with the euro region pressing for an agreement to be wrapped up by June 14. A European official said Greece will study the offer from its creditors and respond on Monday.
Fresh from talks in Brussels, Tsipras faced outrage on Thursday from highly skeptical members of his own Syriza party. The five-page ultimatum from creditors, presented by the European commission president, Jean-Claude Juncker, was variously described as shocking, provocative, disgraceful and dishonourable.
Members of Syriza's moderate wing called for the need of an agreement that will satisfy both sides while members of the hard-line 'Left Platform' within Syriza made plain their opposition calling for new elections rather than what they see as surrender to creditors’ terms..
“It will never pass,” said Greece’s deputy social security minister, Dimitris Stratoulis. “If they don’t back down, the country won’t be lost … there are alternatives that would cost less than our signing a disgraceful and dishonorable agreement.”
Syriza's angry response to the lenders' demands is bound to increase Tsipras' headache. With a majority of only 12 in Greece’s 300-seat parliament, even a small rebellion by some of Syriza’s hard-line left factions could deprive Mr. Tsipras of crucial support, forcing him to rely on opposition votes and potentially triggering elections or a referendum.
“The Prime Minister's main concern is how to control his party, because there are diverse views within the party,” Christopher Pissarides, Nobel Prize-winning economist and professor at the London School of Economics, told Bloomberg Television. “Even if he is prepared to do something, to give some concessions, there will always be some faction within the party that will not want to give it.”
The Greek PM has to balance efforts to keep his party together with the need to seal a deal with creditors to unlock an outstanding 7.2 billion euros in bailout loans.
Without access to capital markets, the country has to meet four payments to the IMF totaling about 1.5 billion euros in June, while its euro zone backed bailout also expires this month. The first one is due on Friday, and Tsipras signaled in Brussels that Greece will meet it.
LARGE GAPS
European officials acknowledged that large gaps remained to be bridged and said they expected Greek counter-proposals.
Tsipras rejected pension cuts and a tax rise on electricity that he said the lenders were demanding. According to Reuters the creditors' five-page plan also asked Athens to commit to selling off state assets and maintaining unpopular labor reforms, demands that would cross the party's declared “red lines”. That may get worse as the proposed measures go through parliament.
THE LIST OF MEASURES
reduce spending on pensions by 1.0 percentage point of gross domestic product
raise a further 1.0 percent or 1.8 billion euros by increasing value-added tax on products ranging from drugs to electricity.
special contribution of 5-10% in large enterprises with net profits of over 5 million euros
increase solidarity levy on incomes over 30,000 euros
increasing luxury levy to 13% from 10%
apply three VAT rates of 6%, 11% and 23%
privatization (regional airports and ten major ports)
Tax on television commercials in order to collect revenue of 100 mil. euros.
Increase fine revenues by 120 million by imposing controls on uninsured vehicles and those lacking an MOT test number.
change the law that prohibits confiscation of primary residence
application of Law for personnel assessment of civil servants
disposal of non-prescription medicines by grocery stores