Greece Says It May Accept Bailout Offer -- With Conditions Last night, the struggling nation became the first developed country to default on the International Monetary Fund.
By Reuters •
This story originally appeared on Reuters
Prime Minister Alexis Tsipras has told international creditors Athens could accept their bailout offer if some conditions were changed, but Germany said it could not negotiate while Greece was headed for a referendum on the aid-for-reforms deal.
In exchange for the conditional acceptance, the leftist leader, who has so far urged Greeks to reject the bailout terms in a referendum planned for Sunday, asked for a 29 billion euro loan to cover all its debt service payments due in the next two years.
With queues forming at many cash machines a day after Greece became the first advanced economy to default on the IMF, and signs that supplies of bank notes were running low, Tsipras has been under growing political pressure to reach a deal.
Global financial markets reacted remarkably calmly to the widely anticipated Greek default, strengthening the hand of hardline euro zone partners who say Athens cannot use the threat of contagion to weaker European sovereigns as a bargaining chip.
Tsipras asked in a letter to creditors seen by Reuters to keep a discount on value added tax for Greek islands, stretch out defense spending cuts and delay the phasing out of an income supplement to poorer pensioners.
"As you will note, our amendments are concrete and they fully respect the robustness and credibility of the design of the overall program," the leftist Greek leader wrote.
Euro zone finance ministers were due to discuss the Greek request on a conference call at 1530 GMT (11:30 a.m. EDT), but the initial reaction from ministers and senior officials was that the letter contained elements that ministers would find hard to accept.
German Chancellor Angela Merkel said Greece had not fulfilled its obligations. She did not exclude further negotiations, but ruled out starting them while Greece heads for the referendum. "Before the referendum, no further talks on an aid program can take place," she said.
It was unclear whether the referendum would go ahead after Finance Minister Yanis Varoufakis indicated on Tuesday that it might be scrapped if a deal could be reached.
Although the letter from Tsipras was dated June 30, it arrived after the 19 Eurogroup ministers had ended a conference call on Tuesday evening. An EU official said it had been received around midnight, when the country's international bailout expired when it defaulted on an IMF repayment.
"The Hellenic Republic is prepared to accept this Staff Level Agreement subject to the following amendments, additions or clarifications, as part of an extension of the expiring EFSF program and the new ESM Loan Agreement for which a request was submitted today," Tsipras wrote.
German Finance Minister Wolfgang Schaeuble poured cold water on hopes of a rapid breakthrough, saying the letter had come too late and it was still not clear what Greece wanted.
"That did not provide further clarity," he said, adding that there was "no basis" for serious negotiations with Athens at the moment.
