Greece has finally offered economic reforms that creditors consider potentially acceptable, giving Prime Minister Alexis Tsipras a couple days to turn a spirit of goodwill into a deal that might keep the country from a painful exit from the euro currency.
Even though a firm deal to get Greece more loans remained elusive Monday, leaders from the 19 euro nations and the International Monetary Fund said Tsipras’ new reforms plan offered the basis to break a four-month deadlock in talks.
Uncertainty over Greece has sapped confidence in global markets, particularly in Europe, and threatened the financial future of Greeks.
“I want to end this political gambling,” said European Union President Donald Tusk at an emergency summit on the issue.
In its compromise proposal, Greece is offering about 8 billion euros ($9 billion) in higher taxes and austerity measures over the next two years, a Greek government official said on condition of anonymity because the measures had not been officially announced.
Financial officials gave a tentative endorsement to Greece’s proposals for spending cuts and reforms they would make in exchange for billions of euros in fresh loans. Greece needs the money urgently, as it faces a June 30 debt repayment it cannot afford.
Tusk said Greece’s plans, which include retirement reform and sales tax changes, “were the first real proposals in many weeks.”
Leaders are now looking at a two-day European Union summit starting on Thursday in Brussels to make the final thrust in the talks and reach a deal that will keep Greece solvent.
A debt default by Greece could destabilize its banks — Greeks are already withdrawing increasingly large amounts of money — and could in a worst-case scenario cause the country to have to leave the euro.
That would be hugely painful for Greeks but experts are more divided about its effects on Europe and the world economy. Several European countries have said publicly they are preparing for the possibility.