Greece bailout: Athens government grapples with final creditors offer

Greece is due to make a €300m (£220m) repayment to the IMF Friday

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Greece’s government is digesting a take-it-or-leave-it offer from the country’s eurozone creditors, amid mounting apprehension over whether the Syriza administration will be able to sign the agreement and avert the threat of default.

The Prime Minister Alexis Tsipras met the president of the European Commission, Jean-Claude Juncker, in Brussels and was given the finalised list of requirements prepared earlier this week with direct input from the German Chancellor, Angela Merkel, and the French president, François Hollande. The document was also signed off by the managing director of the International Monetary Fund, Christine Lagarde, and the president of the European Central Bank, Mario Draghi, increasing the pressure on Greece to agree.

Yet Mr Tsipras will face an immense challenge in getting the proposals – which include labour market reforms, pension cuts and a demand for Greece to run primary budget surpluses, approved by his radical Syriza Party, which has shown growing signs of division in recent days.

Before leaving for Brussels, Mr Tsipras attempted to assert some control over the situation. “I am going to discuss the proposal of the Greek government,” he said. “I am confident that the political leadership of Europe will do what needs to be done. It will accede to realism.”

Greece is due to make a €300m (£220m) repayment to the International Monetary Fund tomorrow, but a Greek government spokesman indicated that Athens is likely to roll up all its €1.6bn payments to the IMF that are due in June and pay them later this month. “If the chances of an agreement don’t look good by the weekend or by Monday, we won’t pay,” the spokesman said.

Reports suggested that the creditors’ document requires Greece to ensure that there is no deficit in its public pension scheme, forcing cuts in provision. It would also force Greece to run a primary budget surplus of 1 per cent of GDP this year, rising to 2 per cent in 2016, 3 per cent in 2017, and 3.5 per cent in 2018. The pension demand, in particular, is likely to meet massive opposition from Mr Tsipras’s party.

Greece needs its creditors to release €7.2bn in bailout payments if it is to pay its liabilities that are coming due over the coming months.

Mr Hollande has suggested that Greece and its lenders are on the brink of a deal. “We are days, I might almost say hours, away from a possible resolution,” he said.

In a sign that he has been pushing for an easing of requirements behind the scenes, Mr Hollande added that “asking too much of Greece would prevent the return of growth”.

Greek debt: Six steps to euro exit

1 Greece defaults to IMF.

2 ECB cuts off emergency lending access to private banks.

3 Depositors make a run on Greece’s banking system.

4 Restrictions imposed on Greeks taking money out of the country.

5 IOUs become a shadow currency as Athens runs out of money.

6 The euro is ditched and the drachma reinstated to pay the bills.