Eurozone leaders said they hoped to finally seal a Greek bailout deal this week to save Greece from default and a possible exit from the euro ahead of a June 30 deadline when the cash-starved country must repay 1.6 billion euros to the IMF or be declared in default.
Greek Prime Minister Alexis Tsipras said the ball was back in the creditors' court and they should provide a deal that would make Greece's huge debts affordable. "We are seeking a comprehensive and viable solution that will be followed by a strong growth package and at the same time render the Greek economy viable," he told reporters.
Tsipras had demanded a promise of debt relief as a condition for a deal, but both German Chancellor Angela Merkel and European Commission President Jean-Claude Juncker evaded the issue. Juncker said it "wasn't the time to discuss" details pertaining to the debt question while Chancellor Merkel, whose country is Greece's biggest creditor, said the dept issue "was not open for debate," adding that "there are still a lot of days left to come to a decision."
Merkel said that while Greece's plans were a "good starting point for further talks” but "there's still a lot of work to be done."
Greece could learn from Ireland, the country's prime minister told CNBC.
"For Greece, there's a lesson from Ireland," Irish Prime Minister Enda Kenny told CNBC Wednesday. "Obviously, we respect and understand the difficulties that apply in Greece from a humanitarian point of view…Greece needs time and space and Europe is giving Greece that time and space."
The updated proposal the Greek side submitted on Monday foresees fiscal adjustment measures and fiscal reforms of about 8 billion euros. It includes higher taxes and welfare charges and steps to curtail early retirement, but not the nominal pension and wage cuts first sought by lenders.
A Greek government official said that employers will have to contribute higher social security contributions to pension and unemployment funds.
This official, speaking to the Associated Press on condition of anonymity, said there would also be a special one-off tax for profitable businesses. Emergency bailout taxes that had been imposed will also remain, even though Tsipras had pledged to phase them out.
Leaders are now looking at the next Eurogroup meeting starting on Wednesday evening, in Brussels to reach a final deal on the reform plan.
But even if an agreement is reached it must go through parliament in both Greece and Germany.
Tsipras will have to deal with the opposition from within his party. This comes mainly from the Left Platform group that controls 30% of the seats of Syriza’s central committee and is dominated by lawmakers opposed to anything that smacks of austerity.
Chancellor Merkel won’t even submit an aid packet to the German Bundestag until the Greeks pass the economic legislation first.