The Greek government is to present its first concrete proposals for an alternative debt plan at an emergency meeting of eurozone finance ministers in Brussels.
Greece’s left-wing government wants to overhaul 30% of its bailout obligations, replacing them with a 10-point plan of reforms.
However, EU ministers have warned that Greece must abide by existing terms.
The EU-IMF bailout for the debt-laden country expires on February 28 and Greece does not want it extended.
Instead the new Athens government is asking for a “bridge agreement” that will enable it to stay afloat until it can agree a new four-year reform plan with its EU creditors.
The Athens stock exchange then fell by more than 3% ahead of the emergency Eurogroup meeting, during which Greece’s new leaders will unveil their controversial debt proposals.
Greece’s Syriza-led government says the conditions of the €240 billion bailout – sweeping spending cuts and public sector job losses – have impoverished Greece.
It rejects the “troika” team – the EU, International Monetary Fund (IMF) and European Central Bank (ECB) – overseeing the bailout’s implementation.
The government’s proposal for overhauling its bailout comes in four parts, according to a finance ministry source widely quoted in Greek media.
Under the first part, Greece would co-operate on 70% of its bailout conditions but wants to scrap 30% – replacing it with 10 new reforms to be agreed with the Organization for Economic Co-operation and Development (OECD). It is unclear what these would be.
The plan also includes bond swaps to reduce Greece’s debt mountain and a proposal to reduce the primary budget surplus target for this year to 1.49% of GDP, rather than the 3% demanded by its creditors.
A swift deal with the EU is unlikely. Most finance ministers, including Germany’s Wolfgang Schaeuble, are insisting that Greece must not renege on its bailout conditions.
The Eurogroup ministers will report to Thursday’s EU leaders’ summit but a deal is not expected before the finance ministers meet again on February 16.
Greece’s left-wing leaders struck a defiant tone on the eve of the key talks with the EU.
Finance Minister Yanis Varoufakis did not rule out clashing with his eurozone counterparts, saying: “If you are not willing to even contemplate a rift, then you are not negotiating.”
The stakes of the talks are high because of fears that a Greek debt default could push it out of the euro, triggering turmoil in the EU.
Greece’s debt currently stands at more than €320 billion – about 174% of its economic output (GDP).
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