The Greek lawmakers have backed plans for a referendum on international creditors’ terms for a new bailout.
The July 5 referendum was called by Prime Minister Alexis Tsipras, who opposes further budget cuts. He urged voters to deliver a “resounding <<No>>” to the package.
Eurozone partners have criticized Greece’s referendum announcement, and rejected its request to extend the bailout program beyond June 30.
Greece could default on a €1.6 billion repayment to the International Monetary Fund (IMF) due on that day.
There are fears the country may leave the euro and that its economy may collapse without new bailout funds.
Alexis Tsipras’ motion on a referendum easily won backing in the 300-member strong parliament, with at least 179 lawmakers voting in favor of it in the early hours of Sunday, June 28.
Speaking just before the vote, Alexis Tsipras described the creditors’ proposal as “an insulting ultimatum” and said an emphatic “No” vote on July 5 would strengthen Greece’s negotiating position.
His government had earlier rejected the creditors’ offer of a five-month extension to Greece’s bailout program in exchange for reforms.
On June 28, eurozone finance ministers rejected the Greek proposal for the bailout extension beyond Tuesday’s deadline. A Eurogroup statement said Greece had broken off negotiations over a new bailout deal “unilaterally”.
Eurogroup head Jeroen Dijsselbloem said it would now be up to the European Central Bank (ECB) to decide whether to continue providing emergency liquidity funding to the Greek banking system.
Meanwhile, queues have formed in Greece outside banks in the past few days amid concerns that the central bank might start restricting withdrawals.
Eurozone finance ministers have reportedly rejected Greece’s request to extend bailout program beyond June 30.
According to The Wall Street Journal, Greece asked for a one-month extension of its expiring rescue deal.
But the request was swiftly rejected by the rest of the eurozone, three European officials said on June 27.
Greek Finance Minister Yanis Varoufakis made the request at a meeting with his eurozone counterparts in Brussels, a day after the government in Athens said it would hold a referendum on its bailout in which it would campaign against the policy overhauls and budget cuts demanded by its creditors.
The finance ministers of the other 18 eurozone countries will meet without Greece later Saturday evening, two European officials said.
Many ministers expressed surprise and disappointment toward Greece’s PM Alexis Tsipras’s decision to call for a referendum in which he would campaign against the budget cuts and policy overhauls demanded by his country’s creditors.
Alexander Stubb, Finland’s finance chief, was one of several ministers who said their negotiations would now focus on how to deal with the consequences of a Greek default.
“Plan B becomes Plan A,” Alexander Stubb told reporters.
Greek PM Alexis Tsipras has announced a referendum on a controversial bailout deal with foreign creditors for July 5.
In a TV address, Alexis Tsipras described the plan as “humiliation” and condemned “unbearable” austerity measures demanded by creditors.
The Greek government earlier rejected the proposals, aimed at avoiding Greece defaulting on its debt.
Greece has to make a €1.5 billion ($1.7 billion) IMF debt repayment on June 30.
Photo AFP
Alexis Tsipras said: “These proposals, which clearly violate the European rules and the basic rights to work, equality and dignity show that the purpose of some of the partners and institutions was not a viable agreement for all parties, but possibly the humiliation of an entire people.”
“The people must decide free of any blackmail,” he added.
Greece has refused to accept cuts to pension payments or public sector wages while the IMF is pushing for deeper spending cuts, not just more tax rises.
A key point of friction is a special benefit paid to some low-income pensioners, which creditors want scrapped.
Creditors also want a wider VAT base; Greece says it will not allow extra VAT on medicines or electricity bills, and has also resisted calls for VAT hikes on hotels and restaurants.
Athens wants a concrete commitment to debt relief, something its creditors are not offering.
Greece PM Alexis Tsipras has criticized the country’s international creditors for failing to accept his government’s latest reform proposals.
Alexis Tsipras said this never occurred with similar measures put forward by other states negotiating bailouts, suggesting creditors might not want a deal.
There are also reports that Greece has rejected an IMF counter-proposal seeking more pension and spending cuts.
Alexis Tsipras’ remarks came before he began new talks to secure a debt deal.
Greece must repay €1.6 billion to the International Monetary Fund (IMF) by the end of the month, or face default and possible exit from the EU.
Eurozone finance ministers are due to finalize a deal on June 24 by the end of the day.
On June 24, the ECB again increased additional emergency funding for Greek banks to stave off fears of a bank run – the fifth time in eight days it has done so as fearful savers withdraw up to €1bn a day from domestic banks.
Photo AP
Only once agreement is reached will creditors unlock the final €7.2 billion tranche of bailout funds.
The agreement being formed is believed to include:
New taxes on businesses and the wealthy
Selective increases in VAT
Savings in pensions linked to curbing early retirement and increasing pension contributions
No further reductions in pensions or public-sector wages – “red lines” for Greece’s Syriza government
PM Alexis Tsipras has been meeting the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – the trio evaluating his proposals.
They are hoping to finalize a deal that would release further loans to Greece before it runs out of money.
Reuters news agency quoted a eurozone official as saying that, despite several hours of talks, there had been no breakthrough so far and the sides were “still stuck at the same red lines”.
European leaders hold an emergency summit in Brussels that could break the deadlock around Greece’s debt crisis.
Greece’s Prime Minister Alexis Tsipras said he hoped Greece would “return to growth within the eurozone”.
European finance ministers have said there is still no basis for making a decision for aid for Greece on June 22.
On June 21, Alexis Tsipras set out new proposals to try to prevent a default on a €1.6 billion IMF loan.
But he has ruled out pension cuts, higher power rates, and an excessive budget surplus.
Greece must repay the loan by the end of June or risk crashing out of the eurozone and possibly the EU.
Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock the final €7.2 billion tranche of bailout funds until Greece agrees to economic reforms.
Greece has announced it will delay June 5 €300 million ($330 million) debt repayment to the International Monetary Fund.
The country told the IMF it will bundle all four of its June payments together.
The Greek government will have until June 30 to pay the €1.5 billion total, which is also the day on which its bailout deal with the EU and IMF runs out.
PM Alexis Tsipras is trying to reach a deal to unlock final bailout funds before Greece runs out of money.
But Greece’s creditors say differences remain between the two sides.
IMF spokesman Gerry Rice said that under a precedent dating back to the late 1970s, governments could ask to bundle together “multiple principal payments falling due in a calendar month… to address the administrative difficulty of making multiple payments in a short period.”
The last country to bundle together payments to the IMF was Zambia in the mid-1980s.
Alexis Tsipras said after talks in Brussels on June 4 that an agreement with Greece’s international creditors was “in sight”.
However, the head of the eurozone’s finance ministers Jeroen Dijsselbloem, who was involved in the negotiations, said later the gap was “still quite large”.
High-level talks were expected to resume on June 5, although Alexis Tsipras was due to brief the Greek parliament rather than return to Brussels.
Alexis Tsipras rejected elements of proposals put forward by his country’s international creditors in talks with Jeroen Dijsselbloem and European Commission chief Jean-Claude Juncker.
He said the sides were now “very close to an agreement” on the key sticking point of primary surpluses – the amount by which tax revenues exceed public spending.
Alexis Tsipras also said there were “points that no-one would consider as a base for discussion”, citing cuts to pensions and a raise in sales tax for electricity.
Jeroen Dijsselbloem said the talks had been successful in narrowing down the remaining issues, although key differences still remained.
He expected Greece to “look at our proposals more carefully, probably come up with some alternative proposals that they want,” Reuters quoted him as saying.
Greece’s cash-strapped government has been haggling since February over the release of the last €7.2 billion in funds, but its current bailout arrangement with the IMF, European Central Bank (ECB) and European Commission runs out at the end of June.
Failure to reach a deal could trigger a Greek default and a potential exit from the eurozone.
Greece has “a realistic” debt deal proposal, PM Alexis Tsipras has said.
“We have submitted a realistic plan for Greece to exit the crisis,” he said.
Alexis Tspiras said the plan included “concessions that will be difficult”.
The prime minister’s statement follows talks in Berlin attended by the heads of both the International Monetary Fund (IMF) and the European Central Bank (ECB).
IMF chief Christine Lagarde and ECB president Mario Draghi presence at the meeting between German Chancellor Angela Merkel and France’s Francois Hollande underlines the seriousness of the talks.
Reports suggest the meeting was aimed at coming up with a “final proposal” to issue to Athens.
Howevr, Alexis Tspiras, who was not included in the meeting, said he had not yet been contacted by the IMF and European officials.
“We are not waiting for them to submit a proposal, Greece is submitting a plan – it is now clear that the decision on whether they want to adjust to realism… the decision rests with the political leadership of Europe,” he added.
A €300 million ($330 million) payment from Greece to the IMF is due on June 5.
There are fears Greece does not have the necessary funds to pay and could default on the debt, ultimately leading to its exit from the eurozone.
Friday’s payment is the first of four totaling €1.5 billion that Greece is due to pay to the IMF in June, and it is understood that the payments could be all bundled together and repaid in a single transaction at the end of the month.
If Greece decides to repay the funds in this way, it would have to notify the IMF, but it has not yet done so.
Greece remains in a four-month long deadlock with international creditors over the release of €7.2 billion in remaining bailout funds.
European lenders as well as the IMF are pushing for greater austerity reforms in return for the cash, which the Greek government has so far refused to make.
Syriza parliamentary spokesman Nikos Filis reiterated that the government would not sign an agreement that was incompatible with its anti-austerity program.
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