THE Greek government is seeking to persuade its international creditors that it can be trusted to bring in promised reforms after it managed to convince its parliament to back a harsh austerity package to avoid financial collapse.
Finance ministers and top officials of the Eurozone arrived in Brussels yesterday for a key meeting to discuss Greece’s economic package.
Jeroen Dijsselbloem, the Eurozone’s top official, said on his arrival at the meeting: “We are still a long way out, both on the issue of content as on the tougher issue of trust.
“On paper it is not good enough yet – and even if it is good on paper, then we still have the question: will it really happen?”
Greece is running out of time to convince its creditors. Today’s summit of EU leaders could be its last chance.
Greece’s banks have been shut for the best part of two weeks and daily withdrawals from ATMs have been limited to ¤60 (£40). The economy is in freefall and the country faces big debt repayments.
Yesterday, Greek prime minister Alexis Tsipras cleared one hurdle as Greek parliamentarians overwhelmingly backed a package of economic reforms and further austerity measures, in the hope that it will convince its European partners to back a third bailout of the country.
Greece has made a request to Europe’s bailout fund for a ¤53.5 billion three-year financial package.
However, the measures proposed, which include some long-demanded by creditors, such as changes to pensions and sales taxes, do not appear to be enough.
Following months of deteriorating relations, creditors are demanding firm legislative action to back up the proposals.
German finance minister Wolfgang Schaeuble, who has taken a hard line on Greece over recent months, said the Greek government will have to do a lot more than just say it wants to reform if it is going to get more money.
“We will definitely not be able to rely on promises,” he said. “We are determined to not make calculations that everyone knows one cannot believe in.”
Schaeuble put the blame for the current crisis firmly on the shoulders of the radical left Syriza government that was elected in January on an anti-austerity platform.
The “hopeful” economic situation regarding Greece at the end of last year has been “destroyed by the last months”, said Schaeuble, who said he anticipated an “extraordinarily difficult” meeting.
Greece hopes enough progress will have been made at yesterday’s finance ministers’ meeting to allow EU government leaders today to formally back a bailout programme.
The summit of the European Union’s 28 leaders has been billed as Greece’s last chance.
The Eurozone ministers have to give their blessing to Greece’s bailout request to the European Stability Mechanism. Traditionally, Eurozone ministers agree by mutual consensus.
The task facing the new Greek finance minister, Euclid Tsakalotos, is to convince his sceptical counterparts that Greece deserves another bailout, which would be its third in five years.
Greece has received bailouts totalling ¤240bn in return for deep spending cuts, tax increases and reforms from successive governments.
Though the country’s annual budget deficit has come down dramatically, Greece’s debt burden has increased as the economy has shrunk by a quarter.
The Greek government has made some form of debt relief a key priority and will hope that a comprehensive solution will involve European creditors at least agreeing to delayed repayments or lower interest rates.
French finance minister Michel Sapin said Europe wants to hear the nitty-gritty around Greece’s proposals.