So what is Greek Finance Minister Yanis Varoufakis proposing to save his country from being ejected from the Eurogroup?
Not much information has been forthcoming but according to government sources the draft proposals to be sent to the International Monetary Fund and EU institutions are mostly of “a structural nature” and do not include many details of projected spending cuts or revenue increases.
Following the talks in Brussels on Friday between officials from the 19 euro members which ended with an agreement to extend the country's €172bn rescue program for four months, the government in Athens has until the end of today to compile a list of policies in return for the continued Eurogroup funding. Finance chiefs will then decide whether the proposals are adequate and if not, another round of emergency negotiations will be required later this week.
“The stakes are too high for the euro area and mostly for Greece, as the country’s economy and especially banking system may face an imminent collapse,” said Panos Tsakloglou, a professor at Athens University of Economic and Business. “One way or another they will manage to strike a compromise on the list of measures required for the extension of the program.”
In order to meet the conditions laid out in Friday's eleventh-hour deal some of the reforms being considered include measures to crack down on fuel and cigarette smuggling and tax evasion that together could increase Greek coffers by about €2bn-€2.5bn this year.
Another key economic policy already mentioned by the Syriza government but not included by Greek Finance Minister Yanis Varoufakis in his letter to the ‘troika’ is the removal of cuts of up to 50 per cent on taxpayer’s debts to the state.
List of Actions
One Greek official acknowledged that Mr. Varoufakis’s proposals amounted to “a list of actions to be taken” without a detailed breakdown of numbers. This might not satisfy Germany’s and the Netherland’s firm expectations of a proposal by Athens of a more precise debt reduction plan and this could trigger its immediate rejection and the prompting of harsher actions by the EU.
In fact, some of the European Union's biggest countries have grown impatient with Athen’s debt demands and may be prepared to see Greece leave the euro zone.
An expected agreement can potentially free up funds to meet some of the pledges made by Tsipras before his Syriza party came to power almost a month ago. He may, however, have to drop some of his promised policies in order to take back control of Greece’s beleaguered finances so he could raise wages and pensions as previously proposed.
This week could see the turning point for Greece and its position in the Eurozone.