The Greek negotiating team is working feverishly to come to a staff level agreement with the lenders’ representatives in order to present it to Wednesday’s emergency meeting of Eurozone finance ministers.
According to sources close to creditors, who prefer to remain anonymous, the new Greek proposal is more comprehensive and substantiated and there are less vague items on the proposed revenues list.
The Greek proposal does not include abolition of early retirements as of July 1st, with the Greek government proposing the reform to be implemented from 2016 onwards. Also, there is a 300-million-euro fiscal gap for 2015, while another 200 million euros in estimated state revenues need substantiation.
Value added tax remains a thorny issue in negotiations with lenders asking higher rates in some areas and abolition of reduced VAT privileges to Aegean Sea islands. Greece insists on 3 VAT rates: 6 percent on medicines and books, 13 percent in fresh foods, power and water bills, restaurants and hotels, and 23 percent for all other products and services.
If the proposal goes to the Eurogroup and gets the approval of Eurozone finance ministers, then it will go to the European partners’ parliaments approval and the Greek parliament.
However, since legislating the new measures will take time, it is possible that creditors will give the current bailout program an extension that can be anywhere between 2 to 6 months.
Also, debt restructuring has not been discussed at all, with creditors pushing the issue for later. Yet, Greek Prime Minister Alexis Tsipras said that Greece will sign an agreement only if it includes restructuring the sovereign debt.
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