Greek Prime Minister Alexis Tsipras is scheduled to meet with Greece's creditors in Brussels on Wednesday afternoon to try to secure an agreement to avert a default in Greece.
The Greek Prime is expected to hold last-ditch talks with the President of the European Commission, Jean-Claude Juncker, the European Central Bank's President, Mario Draghi, the head of the IMF, Christine Lagarde and other top European Union officials to discuss further steps, his office said.
Greece's government offered in talks with its creditors billions worth of "harsh" new budget savings. The proposed measures, worth 8 billion euros, included increases to company and consumer taxes, steps to eliminate early retirement options,privatizations and cuts in defense spending of 200 million euros.
Euro-area finance ministers will meet for the third time in a week on Wednesday evening to discuss these savings, followed by a European Union summit on Thursday and Friday.
Sources close to the talks said to iefimerida.gr, on condition of anonymity, that Mrs. Lagarde claims that “the new reform proposals on taxes are 'recessionist' while she was quoted as ironically asking “which are the measures to create growth that the Greek government proposes?”.
That statement clarifies that the IMF still insists on pension and wage savings worth about 1.8 billion euros and an equal amount of extra revenue from Value Added Tax. “Greece will never accept cuts in pensions and wages or extra taxes on necessities such as electricity”, a government official said on condition of anonymity because of the ongoing talks in Brussels between Greece and its creditors. According to the current data, the IMF will not participate in the agreement, which will be settled between Greece and the EU.
According to a person familiar with the matter said that European Commissioner for Economic Affairs Pierre Moscovici revealed to Greek members of the European Parliament that a possible agreement will include an extension of Greece's bailout program for six months, a step that could ease a standoff with creditors over the country’s future financing.
If a deal is reached on June 25 attention will rapidly shift to national parliaments, which would need to approve the deal to release the cash. German Chancellor Angela Merkel won’t even submit an aid packet to the German Bundestag until the Greek lawmakers take the first step by passing economic-policy changes.
Prime Minister Tsipras could also face difficulties dealing with the opposition from within Syriza, a coalition of left-wing groups which came to power five months ago on a clear anti-austerity platform. The opposition comes mainly from the so called Left Platform, a group that controls 30% of the seats of Syriza’s central committee and is dominated by lawmakers opposed to anything that smacks of austerity.
Two of the party's subgroups, namely "53" and the "Left Platform", held yesterday closed meetings reaching the common conclusion that “the deal will lead Greece into complete subjugation”. It is expected the party's Political Secretariat meeting today will consider finding common ground among the various groups that form Syriza.
If the Greek parliament does fail to back the latest offer Prime Minister Tsipras might resort to calling an election or a referendum on any deal with the country’s international creditors if the package seems to go beyond the political mandate that brought his leftist government into power.