Athens stocks jump as Greece submits new reform proposal to its creditors
The European Commission (EC) confirmed today it has received a new reform proposal from Greece, which could finally unlock bailout money for the embattled nation.
Read more: How to lose friends and alienate people – Tsipras faces backlash
Reuters reported officials from the EC had confirmed receipt of the document, which was originally due on Thursday. The news caused stocks in Athens to jump 2.92 per cent in early trading.
One of the main reforms thought to be included in the proposals, which are just six pages long, is a plan to roll Greek bonds held by the European Central Bank (ECB), due to mature in July and August, into the European Stability Mechanism (ESM). Under the plans, the ESM – a pan-European fund set up in 2012 to provide financial assistance to troubled states – would buy the €6.7bn of bonds.
Greece surprised even its lenders last week when it announced that instead of making a €300m payment due to the International Monetary Fund (IMF) on Friday, it would roll all its payments due to the IMF into one €1.6bn lump, to be paid on 30 June.
Negotiations between Alexis Tsipras, the country's Prime Minister, and its lenders had become stuck after Tsipras insisted on reduced budget surplus targets. While the creditors wanted on one per cent for this year, followed by two per cent next year, Tsipras wanted it slashed to 0.6 per cent this year, followed by 1.5 per cent in 2016.
Under today's proposals, the focus looks to have moved to an extension of Greece's bailout programme, possibly until March next year. Such a move would ease off the pressure on Tsipras, who is stuck between a rock and a hard place – ie. Greece's creditors, who insist on stringent austerity conditions to unlock Greece's next tranche of bailout cash, and his hard-left party, which won the Greek election on an anti-austerity ticket.
Yesterday German Chancellor Angela Merkel said there was "not much time left" to reach a deal.
At a press conference following a summit of G7 leaders in Germany, she added: "Everyone around that table wants Greece to stay in the euro – but we have rules."