Greece

In its latest proposal to creditors, Greece calls for new corporate taxes and other revenue-raising measures. A deal would help unlock fresh aid for the strapped country, just days before it faces a crucial debt payment, the International New York Times DealBook blog reported. Although the Greek proposal drew initial support from European officials, some of the details are prompting pushback. Creditors want further pension cuts and additional changes to the value-added tax system, including better collection efforts.

Greece’s lenders on Tuesday were scrutinizing a proposal seen as a potential breakthrough on a last-minute bailout deal, but significant concerns by more demanding creditors suggest that further days of tough negotiations lie ahead before an agreement can be clinched, The Wall Street Journal reported. After months of virtual deadlock, officials emerged from a string of meetings in Brussels on Monday optimistic over a Greek concession on pensions.

Greece and its European partners appeared on Monday night to be heading for a deal by the end of the week that would secure further funding for Greece and a likely promise of more debt relief in return for changes in the pension and tax systems, European Union officials said, the International New York Times reported. Even so, there is no great confidence that a deal reached when all 28 European Union leaders have a summit meeting here Thursday and Friday will be more than a short-term easing of the Greek crisis, which has preoccupied the European Union for the last five years.

Greek banks probably will get only a short respite with the help of the European Central Bank from accelerating deposit outflows unless a deal is struck soon by politicians, Bloomberg News reported. Greeks withdrew 20 percent of deposits held with the nation’s lenders this year as concern of an exit from the euro intensified. A drip-feed of liquidity from the ECB and Greece’s central bank has kept lenders afloat. As deposit outflows accelerated, the ECB increased the ceiling of funding three times in the last seven days alone.

When, as now appears likely, Greece financially separates from Europe it will at one level be no one’s fault, the Financial Times reported in a commentary. The Greek leaders will rightly explain that having imposed more austerity on themselves than any industrialised country has suffered since the Depression, they could not have done more without light at the end of tunnel in the form of a clear commitment to debt relief. European leaders will rightly explain that they adjusted their positions repeatedly to accommodate the Greeks.

The European Central Bank has sanctioned further support for the Greek banking system amid fears for its stability, ahead of Monday’s crucial EU leaders’ summit, the Irish Times reported. The ECB agreed at an emergency meeting on Friday to raise the cap on funding for the Greek banking sector, according to reports. The ECB move came as German chancellor Angela Merkel’s chief-of-staff said Berlin will work “until the last minute” to secure Greece’s future in the euro zone.

European leaders will try again in an emergency summit meeting on Monday to break the deadlock between Greece and its international creditors after a meeting of eurozone finance ministers ended on Thursday with no deal on Greece’s bailout, the International New York Times reported. Without additional aid, Greece faces the prospect of effectively going bankrupt by the end of June, when it owes a payment of 1.6 billion euros, or about $1.8 billion, to the International Monetary Fund, and when the European part of its bailout program ends.

In a related story, Reuters reported that the European Central Bank told a meeting of euro zone finance ministers on Thursday that it was not sure if Greek banks, which have been suffering large daily deposit outflows, would be able to open on Monday, officials with knowledge of the talks said. The officials said that during the closed-door meeting of the ministers on Greece, the chairman of the meeting Jeroen Dijsselbloem asked European Central Bank Executive Board member Benoit Coeure if Greek banks would be able to open tomorrow. Coeure answered: "Tomorrow, yes. Monday, I don't know".

Greece's creditors should admit the flaws of earlier rescue loans, the Financial Times reported in a commentary. Without this, neither can the political poison between the parties be drained nor can a programme be designed that works. What this means is that even before negotiating terms, the creditors must make four concessions - not financial ones, but intellectual ones. The first is to admit that it was a mistake not to restructure Greece's sovereign debt in April 2010.

The central bank of Greece warned on Wednesday that failure to reach a deal in the country’s long-running debt crisis would result in a default on its bailout loans and economic turmoil, the International New York Times reported. The rare public statement by the Bank of Greece came on the eve of the latest meeting of European officials, aimed at quelling the escalating crisis.