In its last-ditch request for a bailout, Greece offered up a proposal in hopes of getting €53.5 billion ($59.2 billion) in a three year bailout loan. In exchange, the debt-burdened country offered reforms, which were similar to a previous proposal from its creditors on June 26.
Greece's new proposals included a tax hike on shipping companies and scrapping tax breaks for its islands, as well as a higher value-added tax for restaurants and a firm timetable for privatisations. However, these proposals were rejected by the Greek public in the July 5 referendum.
In return, Athens wants the creditors to review the primary surplus for Greece over the next four years and requires the funding to cover its loan obligations until the end of June 2018.
Chairman of Eurogroup Jeroen Dijsselbloem confirmed receiving the documents but will not comment until they have been assessed by experts from the European Commission, European Central Bank and International Monetary Fund. It’s not certain if Greece’s proposal is enough to reach a deal with creditors.
On Friday, Greek parliament will be asked to authorise the leftist government’s latest proposal to negotiate a list of “prior actions,” and if eurozone leaders agree on Sunday’s summit, a further vote in the Greek parliament would be needed to turn them into law.
However, even if Greek Prime Minister Alexis Tsipras and creditors can reach an agreement, he might face a challenge in convincing Greek politicians to accept the deal. Signalling possible trouble ahead, Tsipras' junior coalition ally did not add his signature to the reform proposals. Neither did Energy Minister Panagiotis Lafazanis, who leads the far-left flank of the ruling Syriza party.
The latest offer included defence spending cuts, a firm timetable for privatising state assets such as Piraeus port and regional airports, hikes in VAT for hotels and restaurants and slashing a top-up payment for poorer pensioners.
A Greek government official quoted Tsipras saying on Friday morning, "We are confronted with crucial decisions. We got a mandate to bring better deal than the ultimatum that the Eurogroup gave us, but certainly not given a mandate to take Greece out of the eurozone."
Greece's offer of a new reform plan raised hopes of a deal at the upcoming weekend summit of European leaders, affecting the global markets positively. European stocks surged at the open on Friday, taking the pan-European FTSEurofirst 300 up 1.5 percent to 1,533.63 points, while the Euro STOXX 50 rose 2.2 percent.