Today's for the Greece it could be the last chance to avoid a default that terrifies the whole of Europe. Four Eurogroup meetings in just one week were not enough to find the longed-for agreement between Athens and the creditors. Today the 19 finance ministers will meet again to seek a solution in extremis, despite the fact that the positions of the two sides once again seem very distant.
This was confirmed by the official communiqué issued after yesterday morning's Eurozone Working Group, in which the finance ministers of the creditor countries not too kindly asked Greece to "accept the institution's proposal” which would allow the Greeks to take advantage of new 12 billion euro financing until November in exchange for an agreement that satisfies the requests of the European Commission, the ECB and the IMF.
But the answer of Alexis Tsipras was once again very harsh: "Greece refuses ultimatums and blackmail". And for July 5, you called a refrendum on Brussels' proposals. There are three points that Athens would deem unacceptable: pensions, a VAT increase and the sting on the islands.
In fact, the creditors would like Greece to bring forward to 2022 the increase in theretirement age at 67 years old (or 62 years and 40 of contributions) against the 2036 originally proposed by the Hellenic Prime Minister (on Monday it was down to 2025). In return, the former Troika would be willing to say yes to the postponement of the cancellation of Ekas, the bonus intended for poor pensioners, to 2019.
As regards the Value Added Tax, the reduction from three to two VAT rates is cancelled, but the proposal provides for an increase from 6 to 23% of VAT for restaurants and hotels, while the rate on basic foods, energy and water would remain at 13% and that for medicines, books and theaters at 6% .
Lastly, Tsipras has no intention of giving up on the abolition of the 30% VAT reductions for Greek islands, while an agreement would have been found on raising the tax rate on companies from 26 to 28%.
Finally, the creditors rejected Athens' proposal to introduce a 12% surcharge on corporate profits exceeding 500 euros, an idea that would not ensure any tax revenue, but which represents - in the eyes of the IMF - only "a promise" of dubious realization.
At this point the only sure thing is that there is no more time. The limit to find an agreement is the 30nd June, the day in which Greece will have to repay 1,6 billion euros to the monetary fund, even if there are fears of the reaction that the markets could have on Monday morning in the event that there is still no agreement between the parties.
In the event of non-payment by Tuesday, the default will not be automatic, but an official process lasting about a month will open. After sending an official communication to Alexis Tsipras inviting him to pay the debt and informing him that he will no longer be able to take advantage of IMF aid, Christine Lagarde - two weeks after the deadline - will send an official warning to the Greek President of the Republic to inform him of the serious consequences of the non-repayment of capital. At the end of July, the IMF executive committee will be notified of the non-repayment. At that moment, the IMF and ISDA (the «International Swaps and Derivatives Association») would declare the «credit event», i.e. a credit event which would represent Greece's entry into default. But first we will also have to deal with the Greek referendum.
