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Greece seeks 'happy ending' as creditors mull loan deal

Monday, March 30, 2015 - 06:58
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Greek Prime Minister Alexis Tsipras said in remarks published on Sunday he hoped key talks with international creditors would yield a "happy ending" in the standoff over the country's crippling debt crisis.

[ATHENS] Greek Prime Minister Alexis Tsipras said in remarks published on Sunday he hoped key talks with international creditors would yield a "happy ending" in the standoff over the country's crippling debt crisis.

Athens is set to present a list of economic reform proposals to international creditors this week in a bid to unblock a new 7.2 billion euro (S$10.7 billion) tranche of EU-IMF loans and avoid a debt default.

"I am confident there will be a happy ending soon to this first phase of the negotiations, and to normalising the situation," said Mr Tsipras, whose anti-austerity Syriza party took power two months ago.

Mr Tsipras' remarks came after Germany's Bundesbank chief Jens Weidmann said on Friday he opposed giving Greece any more emergency loans, accusing it of frittering away trust.

European paymaster Germany has been leading the push for austerity in Europe, with Greece complaining that the punishing budget cuts demanded were damaging its economy and threatening to force it out of the eurozone.

"There are powers (in Europe) which have specific interests and which want a rupture," Mr Tsipras said in the interview published by weekly newspaper Realnews.

"But there are also powers - which will prevail - seeking a sincere and honest compromise," he added, appealing for a decision not to be made "by economists and technocrats alone".

"I can't believe democratic Europe would choose the path (of a Greek eurozone exit)," said Mr Tsipras, who met German Chancellor Angela Merkel last week.

Ratings agency Fitch cut Greece's credit rating Friday to "CCC" - meaning debt default was a "real possibility" - but said nevertheless it expected Athens would survive its cash squeeze.

Experts from Greece, the IMF and several EU bodies on Saturday began scrutinising a list of proposed reforms that Athens says would raise an extra three billion euros for government coffers without resorting to wage and pension cuts.

Mr Tsipras' government has proposed higher taxes for the rich, as well as measures to tackle tax evasion and illegal fuel and cigarette smuggling.

"The discussions continued on Sunday in a good atmosphere," a Greek government statement said, adding that "an agreement has been reached about policies targeting the high-income bracket".

A government document said the planned measures would also see the Greek economy grow 1.4 per cent this year.

The Greek cabinet is set to meet later on Sunday to discuss progress at the talks.

Reducing Greece's debt - which in 2014 reached 176 per cent of national output - is among Syriza's main priorities.

Since 2010, Athens has received two successive loans from the EU and the IMF totalling 240 billion euros (US$260 billion) in exchange for draconian austerity measures.

Greece is also looking to China to boost its finances. Beijing is set to buy 67 per cent of the Greek state's shares in Piraeus Port, one of Europe's biggest container ports.

"Greece is now teetering on the edge of chaos with the population withholding tax payments and withdrawing money from the banks - and the possibility of Greece leaving the eurozone, which... would be an utter economic disaster for Greece," chief UniCredit economist Erik F Nielsen warned.

But he said Germany may not ultimately block the new loan, citing its "inherent commitment to Europe".

AFP