EU finance ministers say no to extended bailout for Greece

Wednesday, July 01, 2015. BMG: The BBC reports that Eurozone finance ministers this afternoon rejected a call from the Greek government to extend a bailout for a short period and plot a 2 year rescue deal over a €1.6bn (£1.1bn) payment to the International Monetary Fund (IMF). _83943903_who_owns_greeces_deb_v2_624

Greece had also asked the IMF for more time, but chair of the ministerial group Jeroen Dijsselbloem of the Netherlands said it would be “crazy” for them to extend the Greek bailout if Athens refused to accept proposals to raise taxes and cut welfare spending to meet debt obligations.

A Greek request for a €29.1bn European aid programme would be considered later.

The debt is due by Wednesday morning Greek time and could signal the country leaving the European Financial Zone. A referendum on the proposals raised by the European Commission, the IMF and the European Central Bank is due on Sunday.

Amid fears of a Greek default on its huge public debt of €323bn, people have queued at cash machines. Withdrawals are capped at just €60 a day.

Greek banks did not open this week after talks between Greece and its creditors broke down. However, up to 1,000 bank branches will re-open from Wednesday to allow pensioners – many of whom do not use bank cards – to withdraw up to €120.

Greek PM Alexis Tsipras has advocated a no vote in the referendum and threatened to resign if the vote went against him. However, he has said he does not want Greece to leave the eurozone.

On 20 July, Greece must redeem €3.46bn of bonds held by the European Central Bank. If it fails to do so, the ECB can cut off Greece’s access to emergency loans.

The proposals include a new value added tax (VAT) from 1 July with three rates of 23% for most goods, 13% for basic food, electricity, hotels and water and 6% for medicines, books and theater with no exemptions or discounts; strong disincentives to early retirement and an increase in the retirement age to 67 by 2022, and end top-up grant for poorer pensioners with immediate cuts for wealthiest group; and raise healthcare contributions for pensioners.

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