08:52 | 26/06/2015 Global Economy
With no breakthrough during Monday's Eurogroup summit in Brussels, talks on the long-awaited deal for the Greek debt resolution will be continued with a view to strike a compromise by the weekend, according to Greek government and its international lenders.
The updated proposal the Greek side submitted on Monday foresees fiscal adjustment measures and fiscal reforms of about 8 billion euros (9.1 billion U.S. dollars) in total for 2015 and 2016, in exchange for the disbursement of more aid to Athens to avert default and a possible exit from the single currency in coming weeks, Greek media reported.
In order to balance the tough measures, the Greek side focuses on European financing of growth boosting measures and the request for a debt relief to ensure the sustainability of the Greek debt load, Greek government sources said on Monday night as the meeting of the leaders was wrapping up.
"The proposal of the Greek government is the result of tough negotiations to achieve a deal that will give a viable solution for the Greek economy," a Greek official said to the press anonymously.
The official said that Athens pledges measures of 1.5 percent of GDP for 2015 and 2.5 percent of GDP for next year in order to reach the fiscal targets requested by lenders.
The revised proposal is likely to include indirect salary and pension cuts, increase on taxes, defense spending cuts and the abolition of early retirements as of 2016, according to local media.
The proposal came after five months of negotiations between Athens and lenders, and it's a long way from the ruling party's pre-election pledges.
Analysts noted in reaction to the leaked information that Greek Prime Minister Alexis Tsipras will have to try hard to sell it to parliament members of his party and voters.
In statements after the summit, his interlocutors talked about a "positive step" made by Greece on Monday, but stressed that much work remains to be done until the next emergency meeting of Eurogroup on Wednesday to pave the ground for the EU summit on Thursday.
European Commission President Jean-Claude Juncker, German Chancellor Angela Merkel and French President Francois Hollande said that no new extension to the current bailout, a third program or debt relief was discussed on Monday.
Such topics will be decided at a second stage, they said, dampening Athens' hopes for an immediate clear commitment on debt relief by the other side.
On his part, Tsipras repeated that Greece wants a comprehensive and viable solution, noting that now "the ball was back to the European leadership's court."
On June 30, when the current bailout expires, Athens needs to repay 1.5 billion euros (1.7 billion dollars) in loan installments to the International Monetary Fund. It will be very difficult for Greece to make it without any agreement with its lenders.
Despite the heavy price of the draft agreement as outlined, the Athens stock market general price index closed a few hours earlier on Monday with an impressive 9 percent increase, reflecting even a hard deal was better than a rift with lenders with chaotic repercussions and prolonged uncertainty.
Amidst scenarios of impending capital controls in case Greece would not have a deal by June 30, more than 7 billion euros (8 billion dollars) were withdrawn from Greek banks in the past week, according to unofficial estimates by bankers.
On Monday morning, as markets and citizens were expecting a deal within hours, the pressure on the banking system eased, with only about 500 million euros (568.7 million dollars) withdrawn, according to early estimates./.