Biodun Iginla, BBC News

Biodun Iginla, BBC News

Friday, July 10, 2015

Greece debt crisis: MPs back bailout reform plan

by Isabelle Roussel and Biodun Iginla, BBC News, Athens

1 hour ago


Greece's parliament has backed a government package of economic reforms aimed at ending the country's debt crisis and securing a new bailout.
After winning cross-party support in a late-night vote, PM Alexis Tsipras said he had a "strong mandate" to complete negotiations with Greece's creditors.
However, some of his own MPs withheld their support in protest at austerity measures contained in the new package.
The proposals are to be studied by eurozone finance ministers later.
EU sources says Greece's creditors - the European Commission, the European Central Bank and the International Monetary Fund - believe the plan is positive.
Eurozone officials are also expected to discuss Greek requests for some of the debt to be rescheduled.
Media caption Some elements of the proposals were actually rejected in the recent referendum
In total, 251 MPs voted "Yes", 32 voted "No" with eight abstaining. Nine deputies were absent including former finance minister Yanis Varoufakis.
Among the members of Mr Tsipras's own Syriza party who abstained were Speaker Zoe Constantopoulou and Energy Minister Panagiotis Lafazanis.
"The priority now is to have a positive outcome to the negotiations," Mr Tsipras said in a statement after the vote. "Everything else in its own time."
Mr Tsipras is asking creditors for €53.5bn ($59.47bn) to cover Greece's debts until 2018. It would be the debt-strapped country's third bailout.

Greece in numbers

€320bn
Greece's debt mountain
€240bn
European bailout
  • 177% country's debt-to-GDP ratio
  • 25% fall in GDP since 2010
  • 26% Greek unemployment rate
Reuters
In return, he has given in to demands for a pension overhaul, tax rises and privatisations - measures rejected in a referendum last Sunday.
Greek banks are days away from running out of money and unless a deal is struck the country faces a possible exit from the euro.
The BBC's Mark Lowen in Athens says the package is a major climbdown for the prime minister, whose radical left-wing Syriza party was elected on a strong anti-austerity platform.
Addressing MPs before the vote, Mr Tsipras admitted that his government had made mistakes but he said the new proposals offered the best possible deal for Greece.

Crisis countdown

  • 11 July: Eurozone finance ministers discuss plans (Brussels 13:00 GMT)
  • 12 July: Eurozone leaders meet (14:00 GMT) followed by summit of all 28 members of the European Union (16:00 GMT). Both Brussels
  • 20 July: €3bn payment due from Greece to the European Central Bank
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He described the lengthy negotiations with the creditors as "a battle".
"Now I have the feeling we've reached the demarcation line. From here on there is a minefield."
Mr Tsipras said the bailout deal "entails many proposals that are far from our pledges", but he added it was "marginally better" than the proposals put forward last month by creditors.
He said there was a "national duty to keep our people alive and in the eurozone".
Greece's parliament debated the new measures into the early hours of Saturday
The Eurogroup - eurozone finance ministers - is due to discuss the reforms at 13:00 GMT and a meeting of eurozone heads of government is scheduled for Sunday.
That will be followed by a full EU summit later that day.
The measures submitted in the new Greek document include:
  • tax rise on shipping companies
  • unifying VAT rates at standard 23%, including restaurants and catering
  • phasing out solidarity grant for pensioners by 2019
  • €300m ($332m; £216m) defence spending cuts by 2016
  • privatisation of ports and sell-off of remaining shares in telecoms giant OTE
  • scrapping 30% tax break for wealthiest islands
If approved, the proposals must also be ratified by parliaments in several EU states.
Greece's eurozone partners seem divided over the Greek proposals so far.
French President Francois Hollande described them as "serious and credible", but Germany's finance ministry warned that there was "very little leeway in terms of restructuring".
Greece's creditors have already provided more than €200bn in two bailouts over the past five years. The second expired on 30 June.
Greek banks are closed and a €60 (£43; $66) daily limit on cash machine withdrawals, imposed on 28 June, remains in force for Greek citizens. With a shortage of €20 notes, for many the limit is in effect €50.

The language of debt

Haircut: A reduction - or writedown - in the value of a troubled borrower's debts. In 2011, Greece's private lenders received a massive 50% haircut of what they were owed. At this stage the Greeks are being careful not to ask for debt haircuts.
Debt restructuring or rescheduling: Altering the terms of a loan in order to extend the repayment period. It may also mean dismissing part of the money owed. US Treasury Secretary Jacob Lew has said Greece's creditors should restructure the country's debt, but that such a move would not necessarily mean writing off a part of what Greece owes them. The IMF's boss Christine Lagarde has also said Greece needs debt restructuring.
Debt relief: The forgiveness of part or all of a debt (a "haircut"), or the temporary suspension of repayments on the existing debt. The IMF Chief Economist Olivier Blanchard has said any Greek deal should include debt relief.
All Greek to you? Debt jargon explained
How easy is it to swap currencies?
Full coverage of Greek debt crisis

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