Greeks to submit revised austerity plan to secure bailout extension

9 Apr 15

The Greek government is to set out a further list of public spending cuts and economic reforms by Monday in a bid to have its eurozone bailout deal extended and end the threat of a possible debt default.

Following a meeting of the European Council in Brussels yesterday, the country confirmed that it would provide a revised plan as part of moves to get an extension to the €240bn support package. An initial agreement on a four-month extension was reached on February 20, but the country’s planned reforms have not yet gone far enough to secure the Eurogroup’s backing.

The need for new bailout terms came after the Left-wing Syriza party won the country’s elections in January and promised to end the austerity the country has faced since 2010. The government, led by Prime Minister Alexis Tsipras, pledged to end some cuts and halt privatisation of state assets.

Speaking after yesterday’s meeting, which included talks between Tsipras and German chancellor Angela Merkel, a Greek government spokesman said an updated list of reforms would be produced by Monday. This is expected to include a similar amount of consolidation in total to what was agreed by the previous conservative-led administration, although reductions may fall in different areas.

Greece is thought to need additional funds from the troika of international institutions – the International Monetary Fund, the European Commission and the European Central Bank – before the end of April to avoid default.

Speaking after the talks, Merkel said Greece must stand by its commitment to provide reforms.

‘We have stressed once again that we stand by the resolutions taken by the Eurogroup on February 20, that in the spirit of mutual trust we consider it our duty to accelerate work on implementing this statement of the Eurogroup,’ she said.

‘We once again affirmed our commitment to the process within which the assessment takes place. The political talks will thus take place in Brussels.’

Speaking to members of the European Parliament yesterday, ECB president Mario Draghi also called on Greece to resume a ‘policy dialogue’.

‘To have a credible perspective, Greece needs to put in place a process to restore policy dialogue between the Greek government and the three institutions,’ he said.

In his comments to the parliament’s Economic and Monetary Affairs Committee, Draghi rejected allegations that the ECB was blackmailing the country by not buying Greek bonds.

‘The ECB's exposure to Greece is €104bn, equal to 65% of its gross domestic product,’ he said.

‘This is the highest exposure in the whole of the eurozone. The ECB does not create rules for Greece, we apply them. We lifted the waiver after its bonds fell below the threshold of what we accept as collateral.’