Greece submits list of reform proposals

Greece submitted a long-awaited list of structural reforms to its creditors yesterday as its leftist-led government warned it would stop meeting debt obligations if negotiations failed and aid was not forthcoming.

As officials from the European Union, the European Central Bank and the International Monetary Fund (IMF) prepared to pore over Athens’ latest proposals, international economic affairs minister Euclid Tsakalotos raised the stakes saying Greece was prepared to go its own way “if things do not go well”.

“They [creditors] have to know that we are prepared for a rift, otherwise you can’t negotiate,” he told Star TV.

The government, dominated by the anti-austerity Syriza party, had assembled a package of 18 reforms in the hope of unlocking £7.2 billion (€9.8 billion) in financial assistance.

The desire was for a positive outcome, Tsakalotos said, but Athens’ new administration was not willing to abandon its anti-austerity philosophy. Two months after assuming office, the government’s priority remained to alleviate the plight of those worst affected by Greece’s catastrophic five-year crisis, he said.

“We are prepared, if things do not go well, for a clash,” the British-trained economist said. “Our top priority remains payment of salaries and pensions.”

The reform-for-cash deal, the latest twist in Greece’s battle to keep bankruptcy at bay, did not – and would not – include any recessionary measures, a government official said, adding it was hoped the proposals would bolster state coffers with €3 billion in badly needed revenues.

“The actions proposed though the reforms list foresee revenues of €3 billion for 2015 which under no circumstances will come from wage or pension cuts,” Tsakalotos said. “The list does not include recessionary measures.”

Lenders have insisted that recessionary measures are unavoidable if the economy of Europe’s most indebted state is to be put on a sustainable path.

The 18 proposals – three times as many as put forward and dismissed by prime minister Alexis Tsipras’ government last month – foresaw GDP growth of 1.4 per cent this year. The package also endorsed finance minister Yanis Varoufakis’ argument that the primary surplus demanded of Greece would have to be reduced. As such, the primary surplus was estimated to hit 1.5 per cent this year – half that in the country’s existing bail-out programme.

With the country shut out of international capital markets, economists and officials have warned Athens could run out of money by April 9th, when it must pay €450 million to the IMF.

“The government is not going to continue servicing public debt with its own funds if lenders do not immediately proceed with the disbursement of funds which have been put on hold since 2014,” said government aides.

“The country has not taken receipt of an aid instalment from the EU or IMF since August 2014 even though it has habitually fulfilled its obligations.”

Following a precipitous decline in tax revenues, the Tsipras administration has been scrambling to raise funds, sequestering the cash reserves of state entities, raiding pension funds and postponing payments for supplies.

A euro working group is expected to respond to the Greek reform proposals on Monday.