Al Jazeera’s Kamahl Santamaria explains the background of the Greek debt crisis.
The Greek government has said it is prepared to roll out pension and tax reforms as eary as next week, as demanded by European creditors, in return for a three-year bailout package to save its economy from collapse.
“We propose to immediately implement a set of measures as early as the beginning of next week including: tax reform related measures; pension related measures” if the loan from the European Stability Mechanism (ESM) was forthcoming, the finance ministry said in a letter sent on Wednesday to the eurozone bailout fund.
The letter, signed by newly appointed Finance Minister Euclid Tsakalotos, appeared aimed at giving Greece some breathing room to work out a new, broader bailout deal with its eurozone creditors.
The ESM was set up as a lender of last resort for eurozone states to ensure the stability of the European single currency.
Tsakalotos said in his letter he wanted to tap the ESM “to meet Greece’s debt obligations and to ensure stability of the financial system”.
He stressed that his country was “committed to a comprehensive set of reforms and measures,” specifically on the critical issues of pensions and taxes – both of which the creditors have demanded changes to.
On Wednesday, Greece said its banks would stay closed and ATM withdrawals would remain limited until Monday in a sign of the deepening crisis gripping the country.
Greek Prime Minister Alexis Tsipras on Wednesday vowed to present “credible” reform plans before a deadline set by the European leaders.
“The Greek government will tomorrow file new concrete proposals, credible reforms, for a fair and viable solution,” Tsipras told the European Parliament in Strasbourg.
Tsipras received applause and cheers as he addressed lawmakers, calling for a fair deal from creditors.
“We demand an agreement with our neighbours, but one which gives us a sign that we are, on a long-lasting basis, exiting from the crisis which will demonstrate to us that there is light at the end of the tunnel.”
Al Jazeera’s John Psaropoulos, reporting from Athens, said the government of Tsipras has offered “nothing new” in the latest plan.
The government’s room for manoeuvre, however, is restricted by Sunday’s referendum which showed Greek voters overwhelmingly opposed to further cuts under the austerity terms demanded by the creditors.
Tsakalotos’ letter did not explicitly say that Greece would cut pension spending – and especially limit access to early retirement – or raise sales tax nationwide to 23 percent, as creditors want.
The finance minister confirmed Tsipras’ promise to present the Greek government’s reform proposals in detail to its eurozone partners on Thursday.
“Greece is committed to honour its financial obligations to all of its creditors in a full and timely manner,” the finance minister wrote.
Greece is teetering on the brink of financial collapse and a possible exit from the eurozone after the developments of the past two weeks.
On June 30, the last bailout programme expired and Greece failed to honour a loan repayment to the International Monetary Fund, cutting it off from further IMF credit until it settles the $1.7bn amount.
Tsakalotos said the letter underlined “the urgency of our loan request at this time given the fragility of our banking system, our shortage of available liquidity, our upcoming obligations, our buildup of internal arrears, and our expressed desire to clear our outstanding arrears with the IMF and the Bank of Greece”.
It also reiterated Greece’s “commitment to remain a member of the eurozone”.