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Tuesday, 22 September 18:20 (GMT -05:00)

Business And Politics News

Greece Prepares Reforms for 12 Billion Euro

According to Greek media, the country’s government is preparing a package of proposals on economic reforms for two years worth 12 bln. euro. “It is worth mentioning that such offer exceeds the initial plan by 4 bln. euro,” states the “Market Leader”.
During this year Greece has failed to reach the 0.5-percent planned economic growth. Instead, there have been several months of uncertainty and a two-week period of controlling capital flow. Besides, there are real signs of economic recession, and drop of GDP has amounted to about 3 percent. Due to current situation Greek government find it necessary to increase its measures for 2015 and 2016 from 8 bln. euro to 12 bln. euro, in other words, by two billion per year. Governmental measures presuppose increase of corporate tax from 26 to 28 percent, increase from 10 to 13 percent of VAT on luxury goods, as well as on processed products, transport, and restaurants. Certain medical services of private sector will rise from 13 to 23 percent, and of hotel business – from 6.5 to 13 percent.
The day before the press service of European Stabilization Mechanism (ESM) has confirmed receipt of Greek financial aid application. The application is to be regarded by ministers of finance of the countries of the EU telephonically. Earlier Greek premier A. Tsipras has asked to give his country an intermediate-term loan of 7 bln. euro. It was found out on Monday that new Greek minister has not made new proposals during the meeting of Eurozone finance ministers. According to the head of Eurogroup J. Dijsselbloem, due to the absence of any clear offers there has been made a decision to wait until new application of Greek side for getting an intermediate-term credit on ESM line. This was supposed to happen within several hours so that on Wednesday Eurogroup could hold a telephone conference and regard Greek application. As explained by Dijsselbloem, such conference could not be held on Tuesday, for ministers of Eurogroup have to clearly understand proposals made by Greece, so they have to wait until there is a letter from it.
Up to this day Greek government had to prepare proposals on comprehensive reforms. Such proposals have to be made, as the country desperately needs means, which it plans to direct into covering debt obligations and ensuring stability of its financial system. According to media, in case of receiving the means the government promises to proceed to immediate reforms already next week, including reforms of tax and pension systems.
A special summit of the EU on Greek problems is scheduled for Sunday.
Greece Needs to Restructure its Debts – Head of IMF
International Monetary Fund reminds that Greece has to deal with restructuring the country’s debt, for new program of financial aid is impossible without it. The managing director of IMF C. Lagarde supposes that Greek reforms have to come along with work on debt restructuring in order to prove its steadiness. This is dictated by the situation, in which the country has appeared; otherwise, it will not solve the acute crisis.
Lagarde has also highlighted that despite default by credit before IMF dated June 30, the fund is ready to continue work on helping Greece in order to find a decisions of its problems. However, it cannot count on getting a new credit from IMF, for it has not repaid its previous obligations timely, and the fund has to follow its rules, thus preserving objectivity.
The president of European Central Bank M. Draghi has commented on Greek situation after the meeting of representatives of Eurozone. Thus, assessing chances of Greece, Draghi has expressed great doubt that the country will manage to save from bankruptcy. He said that he is not certain whether a decision for Greece will be found, and it is unlikely that the country will get considerable help from Russia. In particular, the official has admitted that this could become a “real danger”, but at the same time he gives little likelihood for this to happen, as Russia also does not have money for such help.
Rather harsh comments on Greek problems have been expressed by the minister of finances of Finland A. Stubb. In interview to media he has highlight that Greece does not have time for disputes with countries of Eurozone. Finnish minister has advocate for stopping bargains and disputes, for there is absolutely no time for such distraction. There has been passed a certain way, which requires termination in the form of an agreement. Actions need to be quick. Time is running out very fast, and the deadline is set – July 20. This day expires the term of payment 3.5 bln. euro to European Central Bank. Stubb has admitted that this situation is clear to everyone: institutions, Greeks, and other countries of Eurogroup.
On the other hand, the minister of finance of Finland suggested everyone to be ready that Greece may quit Eurozone, at the same time saying that he would not like to have such outcome. He is sure that some outcome will be found. “We are not leaving Greece and do not want a Grexit, but it is clear that we should be prepared to different variants because time is running fast,” explains Stubb. The minister has also stated Finnish position on Greek debt obligations – the country’s government is absolutely against writing down debts or their restructuring.


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Text: Denis Miagkiy
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