Suddenly there's a glimmer of hope for Greece's bailout as Athens gets its last chance to avoid default

Mike Bird

Greece on Monday submitted a new bundle of proposals to the institutions in charge of its bailout, with the hope of securing the cash it desperately needs.

The proposals come just in time for the emergency meeting of European heads of government called at the end of last week. It is being billed as the last chance to secure a deal for the cash-starved country.

The full details of Greece's proposals have not been disclosed yet. But until now, the major areas contention were over the scale of fiscal austerity, labour-market changes, and cuts and reforms to the pension system.

Any indication that the Greek government has blinked and conceded to any of those points would be great news from the perspective of the creditors but would cause political strife for Prime Minister Alexis Tsipras at home.

Here's a snippet from The Guardian, which originally reported the proposal:

Among the measures that the Syriza-led coalition was reportedly working on Saturday were reductions in early retirement schemes. Pension and VAT reforms, along with labour deregulation, remain sources of friction between the two sides.

Here are some of today's major developments

  • Eurogroup chief Jeroen Dijsselbloem, speaking at a press conference of the Eurogroup (including the finance ministers of the eurozone nations) called the Greek proposals a "positive step."
  • Nikolaos Karamouzis, chairman of Greece's Eurobank, told BBC economics editor Robert Peston "the Greek banking system cannot afford, cannot continue in the current situation, of every day losing hundreds of millions of euros."
  • He followed up by saying "no deal [today] would be a disastrous event," and suggested that capital controls could be brought in without some progress today.
  • Former French finance minister and current EU Commissioner Pierre Moscovici saidhe was confident a deal could be done Monday evening.
  • And EU Commission chief Jean-Claude Juncker's chief of staffreferred to the potential for a "forceps delivery" of a deal.
  • Those are two of the most positive comments about a Greek proposal that we've heard from the European creditors. Last week almost everyone entered Friday's Eurogroup meeting of finance ministers saying there would not be a deal — though it remains to be seen whether Greece's new efforts will be enough for the more hardline European governments.
  • According to the Financial Times, the Greek negotiators sent the wrong document to their creditors. That's the second time in the current round of negotiations that Greece has made that mistake, but there's no indication so far that the negotiations will be materially affected by it.

Athens is aiming to unlock its last bailout instalment of €7.2 billion ($8.2 billion, £5.16 billion), which it desperately needs to make major debt repayments to the International Monetary Fund (IMF) on June 30 and the European Central Bank (ECB) on July 20.

According to Reuters, two bankers at a meeting with Bank of Greece governor (and former finance minister) Yannis Stournaras said he told them to prepare for a "difficult day" on Tuesday if no deal could be reached. Preorders for deposit withdrawals from banks have reportedly reached €1 billion (£720 million, $1.14 billion) after €4 billion (£2.87 billion, $4.56 billion) left banks last week.

Another call is planned for the ECB to discuss Greece's banking sector Monday. Though the limit for Emergency Liquidity Assistance (ELA) was raised just at the end of last week, money has been leaving banks so quickly that it will most likely need to be increased again.

If the Greece government defaulted on one of its loans, that would put the ELA provided by the ECB in peril — it's the only thing propping up the country's shattered banking system.

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