Agreement before Monday: Greece and its creditors intense meetings

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At press time, Greece and its creditors, the European Central Bank (ECB), the European Commission (EC), and the International Monetary Fund (IMF), had not yet reached an agreement to unlock the last tranche of the bailout loan Greece needs to make a €1.6 billion payment to the IMF on June 30, the same day the current bailout program is set to expire. Without an agreement, Greece risks a default, the failure of its banks, capital controls, and a potential Grexit–an exit from the Eurozone and return to its own currency.

European and IMF officials have been engaged in intensive talks and emergency meetings with Greek leaders since last week, and on Monday many expressed hope of an agreement based on Greek proposals to phase out early retirements, raise taxes on well-off corporations and individuals, and increase employers’ pension contributions.

Stock markets reacted favorably. But then on Tuesday the IMF criticized the Greek proposals as likely to inhibit economic growth. On Wednesday, the creditors presented their own new proposals for changes to public pensions and sales taxes, as well as budget cuts, which Greek leaders rejected as too hard on working people and pensioners. On Thursday, Greece and its creditors continued intense meetings, but they were unable to agree on a unified proposal and plan to continue talks on Saturday.posals have been diverging.

Since the Greek gross domestic product (GDP) decreased by a quarter during the past five years, while unemployment soared above 25 percent (twice that for young people), many pensions are supporting large families with no other income source. According to The Guardian, approximately 8,500 small and medium-sized businesses have closed so far this year; that’s on top of thousands more closed earlier. Taxes have already increased dramatically, along with suicide rates. With its debt now at 180 percent of its GDP, Greece insists that debt restructuring should be part of any agreement.

The current Greek coalition government (the radical leftist SYRIZA party and the right-wing nationalist ANEL party) was elected in January on an anti-austerity platform. Since taking office, Greek Prime Minister Alexis Tsipras has claimed that the previous agreement with creditors included extreme austerity measures that led to great suffering in Greece. Given these claims, which have been supported by many prominent economists, Tsipras has been resisting lenders’ demands for additional austerity measures. This week, he finally agreed to compromise, but creditors were not satisfied, nor were most Greeks.

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