Hours before possible default Greece makes new aid proposal

Greece submits new two-year aid proposal calling for parallel debt restructuring in an effort to resolve deadlock with its lenders

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

As Greece heads towards a default on a debt payment due to expire on Tuesday midnight, a new proposal came from the Greek Prime Minister’s office. The debt-stricken country submitted a two-year aid proposal calling for parallel debt restructuring. 

“The Greek government proposed today a two-year deal with the ESM [European Stability Mechanism] to fully cover its financial needs and with parallel debt restructuring,” the government said in a statement. “The Greek government will seek viable solution, until the end, aimed at staying in the euro,” the office added. 

Earlier, the European Commission urged Greece to accept the proposed deal in order unlocking the necessary bailout. 

Greek officials said they wanted a deal, however there was no firm offer or move towards accepting European Commission President Jean-Claude Juncker’s proposals. 

“We want a viable solution. If we get a credible proposal that leaves even a sniff of a viable solution, we will be the first to take it,” a senior finance official said. 

Meanwhile, Greek Finance Minister Yanis Varoufakis said Greece will not pay the €1.6 billion debt installment to the IMF on Tuesday. Varoufakis added that Athens still holds hope for a last-minute deal with creditors. 

Greek Prime Minister Alexis Tsipras announced on Monday that his country will go a referendum on July 5 to either accept or decline austerity measures proposed by Greece’s international creditors. The referendum is expected to be an effective choice between remaining in the euro or reverting to the drachma. 

According to opinion polls Greeks are in favour of staying in the eurozone, but a rally of tens of thousands of anti-austerity demonstrators also took place in Athens, with participants saying that many Greeks feel they are being pushed into a corner by the country’s lenders.  

In case a deal is not reached Greece will default on debt to the IMF, and based on the outcome of Sunday’s referendum Greece might be the first country to leave the eurozone, leading to an unpredictable future both for the eurozone and global markets. 

TRTWorld and agencies