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Tuesday, February 27, 2024

Greek PM seeks backing for bailout

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Greek prime minister Alexis Tsipras sought his party’s backing today for a new budget austerity package that is harsher than what he urged Greeks to reject in a vote just last week, but would provide the country with longer-term financial support.

Government ministers signed off on the sweeping new measures, which include pension cuts and tax increases that are likely to inflict further pain on people who have just emerged from a six-year economic depression.

If approved, Greece would get a three-year package of loans worth nearly £38 billion as well as some form of debt relief. The package would be far larger than the £5 billion creditors had been offering to Greece during the previous five months of fruitless negotiations.

Greece’s latest proposal was sent to rescue creditors who will meet this weekend to decide whether to approve them. The new package of loans would be Greece’s third bailout programme since it lost access to financing from bond markets in 2010.

In an unusual move, Mr Tsipras is first seeking authorisation from parliament to negotiate with the creditors based on the proposal in a vote. He is essentially asking his Syriza party to sign off on measures that to many feel like a U-turn since more than 60% of voters opposed more austerity in last Sunday’s referendum.

Mr Tsipras convened his party’s policy-makers for closed-door discussions this morning before the parliamentary debate. The proposal was debated at committee level this afternoon. Votes are usually held at midnight, but they can go later.

The coalition government has 162 seats in the 300-member parliament and pledged backing on a deal from a large section of opposition policy-makers. But failure to deliver votes from his own government could topple Mr Tsipras’s coalition.

The proposals are to be discussed by eurozone finance ministers tomorrow ahead of a summit of the European Union’s 28 leaders on Sunday.

Although German officials would not be drawn on the merits of the Greek proposals, French president Francois Hollande said they are “serious and credible”. France’s Socialist government has been among Greece’s few allies in the eurozone during the past months of tough negotiations.

Jeroen Dijsselbloem, who chairs eurozone finance ministers’ meetings, said the proposals were “extensive” but would not say whether he considered them sufficient.

He was due to hold a conference call with the leaders of other key creditors, the EU’s executive Commission, the European Central Bank and the International Monetary Fund.

They are then expected to send their assessment of the proposal to the eurozone finance ministers later.

Meanwhile, banks remained shut since the start of last week and cash withdrawals were restricted to €60 per day. Although credit and debit cards work freely within the country, many businesses are refusing to accept them and insisting on cash-only payments. All money transfers abroad, including bill payments, require special permission.

Finance minister Dimitris Mardas said the banks would be gradually restored to operation. They are currently due to remain closed until Monday, at which time he said a new order would be issued expanding what transactions can be carried out. Experts say it is unlikely that, even in the event of a deal, the limits on cash withdrawals and transfers will be lifted completely for some time.

Rallies backing and opposing the government are planned in central Athens this evening.

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