Greece promises new plan for creditors

Graffiti in central Athens sends Angela Merkel a message yesterday. Picture: Getty
Graffiti in central Athens sends Angela Merkel a message yesterday. Picture: Getty
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A GREEK minister has said new proposals will be put to creditors ahead of an emergency EU summit planned for tomorrow.

State minister Alekos Flambouraris also told Greek media he believed the European Central Bank (ECB) would not allow Greece’s banks to collapse.

Reports said billions of euros have been withdrawn from Greek banks in the past week.

The summit comes amid attempts to prevent Greece defaulting on a €1.6bn (£1.1bn) International Monetary Fund (IMF) loan repayment.

The European Commission, the IMF and the ECB are unwilling to unlock bailout funds until Greece agrees to reforms.

They want Greece to implement a series of economic changes in areas such as pensions, VAT and on the budget surplus before releasing €7.2bn of funds, which have been delayed since February.

Details of the new proposals have not yet been released.

Greek prime minister Alexis Tsipras has said he believes “there will be a solution based on respecting EU rules and democracy which would allow Greece to return to growth in the euro”.

But German chancellor Angela Merkel has warned there must be a deal between Greece and its creditors ahead of tomorrow’s summit. Otherwise, she said, the summit would not be able to make any decision.

Tsipras was due to hold further talks with his negotiating team in Athens last night.

Greece has less than two weeks before the IMF loan repayment is due.

If the country fails to make the repayment, it risks having to leave the eurozone and possibly also the EU.

On Friday, the ECB approved more emergency help for Greece’s banks. The amount of extra funding has not been officially disclosed.

It was reported that withdrawals by Greek savers between Monday and Friday reached about €4.2bn, which represents about 3 per cent per cent of household and corporate deposits held by Greek banks at the end of April.

Close to €1bn was withdrawn on Friday alone, the financial website Euro2day said.

“There are no lines [queues] or panic, it has been a quiet and gradual phase of withdrawals,” one banker said.

A fully fledged run on the banks could upset the plans of the Greek government and its creditors. It is thought any introduction of capital controls will depend on the behaviour of the Greek people and if the outflow of deposits from banks reaches alarming levels.

Greece has said it will not accept cuts to pension payments or public sector wages.