As eurozone finance ministers converge in Brussels on Wednesday to further assess Greece’s economic proposals in a bid to move toward a deal, Prime Minister Alexis Tsipras is to meet with European Commission President Jean-Claude Juncker, European Central Bank President Mario Draghi and International Monetary Fund chief Christine Lagarde in the Belgian capital in a bid to overcome lingering obstacles.
According to Finance Ministry sources, Greek government officials provided representatives of the country’s creditors on Monday with further technical details on the proposals submitted by the Greek side on Monday.
A European official told Kathimerini there are still weaknesses in Greece’s proposals and that time is running out. The official added that Greece’s proposals violate many of the creditors’ “red lines” on value-added tax rates and pensions. Creditors believe the Greek proposal is too heavy on revenue-raising measures, which could push the country back deeper into recession, rather than spending cuts. That formula would widen the fiscal gap, requiring further measures, they argue. According to Germany’s Suddeutsche Zeitung, the IMF believes the EC is being too soft on Greece while some European officials have reportedly accused the Fund of not really wanting a deal. The IMF appears to want cuts to state spending on pensions and changes to VAT accounting for 1 percent of gross domestic product. It also appears to want to push the VAT on cafes and restaurants to 23 percent from the current 13 percent.
Another headache for the Greek government is that it must draw up a list of prior actions. The aim is for a staff-level agreement by Thursday. This would allow any deal to be approved at an EU leaders’ summit on that day, paving the way for the measures to be voted on in Greece’s Parliament and then in the parliaments of eurozone countries. The likeliest scenario is that eurozone parliaments will be asked to vote on a disbursement of aid and an extension of the current Greek bailout at the same time.
Several European officials indicated on Tuesday that a deal was still possible. “I am convinced that we will reach an agreement,” European Monetary and Economic Affairs Pierre Moscovici told French radio, adding that “work remained to be done” in the areas of VAT and pensions.
The Greek government’s chief negotiator Euclid Tsakalotos told ERT that Greece was “closer than ever” to a deal, which he said he expected would include “at least a partial solution” to the country’s debt burden.