23 Jun 2015

Greece offers plan to break fiscal impasse

7:39 am on 23 June 2015

Greece's economy minister has spelled out the terms of new proposals to end deadlock on its debt crisis, amid hopes a deal can now be struck this week.

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Greece's talks with its international creditors have stalled. Photo: AFP

It includes new taxes on businesses and the wealthy, Giorgios Stathakis told the BBC.

Eurozone finance ministers have welcomed the plan, saying there could be a deal "within days".

Greece will default if it does not repay a €1.6bn IMF loan by the end of the month.

If that happens, it risks crashing out of the single currency and possibly the EU.

Eurozone leaders are currently discussing Greece's proposals at an emergency summit in Brussels.

Mr Stathakis told the BBC he was confident the new proposals to balance the government's books had broken the deadlock with its creditors.

"We [will] try to remove the tax burden from pensions and wages towards business and the wealthy," he said.

He said the proposals also included an increase in the VAT rate for some selected items.

Meanwhile, dozens of riot police have been deployed to prevent clashes between anti-austerity and pro-euro protesters gathered outside the Greek parliament building.

Speaking ahead of Monday's summit, European Council President Donald Tusk said the latest Greek proposals were the "first real proposals in many weeks".

Anti-austerity graffiti on an abandoned house in Athens.

Anti-austerity graffiti on an abandoned house in Athens. Photo: AFP

"This evening I want all cards on the table. That doesn't mean I want to negotiate technical details, but it means I want to end this political gambling," he said.

French President Francois Hollande, also attending the meeting, said he saw improvements with the proposals but warned "not everything has been resolved".

Talks have been in deadlock for five months. The European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock the final €7.2bn tranche of bailout funds until Greece agrees to economic reforms.

The European Central Bank (ECB) has again increased its emergency funding for Greek banks after anxious savers withdrew more than €4bn in recent days.

Greek PM Alexis Tsipras, who has ruled out pension cuts, higher power rates, and an excessive budget surplus, said he hoped Greece would "return to growth within the eurozone".

He met the heads of Greece's three international creditors in Brussels, ahead of his talks with the leaders of 18 other eurozone nations later on Monday.

But eurozone finance ministers said they were not given enough time to study them for a proper assessment, amid confusion over different versions of the Greek proposals submitted.

Speaking after the meeting, Mr Dijsselbloem described the proposals as "broad and comprehensive", but said work was needed to check they added up "in fiscal terms".

One of the key power-brokers, European Commission chief Jean-Claude Juncker, told reporters his goal was to find an agreement "by the end of the week".

Earlier, Germany's Wolfgang Schaeuble told reporters he had not seen anything new from Greece so far and "without anything new, there is nothing for the ministers to prepare for their leaders". The Irish and Finnish finance ministers echoed the sentiment.

News of a possible breakthrough gave a boost to European stock markets, with Greece's main stock exchange jumping 9 percent by the end of trading on Monday.

The deadline for Greece to pay back a slice of its loan is 30 June, but a last-minute deal would make it difficult to arrange the logistics of transferring the money.

A separate European Council summit is scheduled for Thursday and Friday, and its agenda is packed.