Greece promises reforms in appeal for bailout

Alexis Tsipras had a mixed reaction from MEPs yesterday. Picture: Getty
Alexis Tsipras had a mixed reaction from MEPs yesterday. Picture: Getty
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Greece made a request for aid from Europe’s bailout fund yesterday as it rushed to deliver details of its proposed economic reforms in time to secure the country’s future in the euro and avoid a descent into financial chaos.

The government has asked for a three-year loan programme and insisted the rescue will be accompanied by major economic reforms. No amount was mentioned.

According to the letter sent to the European Stability Mechanism, Athens said it would “immediately implement a set of measures as early as the beginning of next week”.

Those include tax and pension reforms – two of the issues that divided the Greek government and creditors over the past few months of protracted discussions.

In the letter, the Greek government said it was asking for the loans “given the risk to the financial stability of Greece as a member state and of the euro area as a whole”. Its aim, it went on, was to regain “full and affordable market financing to meet its future funding requirements as well as sustainable economic and financial situation” by the time the loan ends at the latest.

Greece has been told it has to deliver details of the reforms by tomorrow night so a deal can be agreed at a summit of the European Union’s 28 leaders on Sunday.

Without a deal, the country faces an almost inevitable collapse of the banking system, and European leaders have warned Greece this is its last chance to remain in the euro. Markets are holding up despite the apparent ultimatum, with many investors predicting a last-minute deal.

Chris Beauchamp, a senior market analyst at IG in London, said last night: “Guarded optimism is the theme today, as the eurozone gives Greece one final deadline.”

Addressing the European Parliament in Strasbourg yesterday, Greek prime minister Alexis Tsipras said his country is seeking a deal that would bring a definitive end to his country’s financial crisis. Greece has had two bailouts from its European partners and the International Monetary Fund since May 2010, totalling €240 billion.

He said: “We need to ensure the medium-term funding of our country with a development and growth programme.”

The head of France’s central bank said he feared the “collapse” of the Greek economy and “chaos” if Greece does not strike a deal by Sunday.

In unusually strong language, Christian Noyer told Europe-1 radio he predicted “riots” in Greece if no deal is reached.