Grecian Prime Minister Alexis Tsipras is heading for an inevitable showdown with international creditors Wednesday to push a proposed bailout plan that would spare Greece from financial demise, according to Washington Times. If creditors accept Alexis Tsipras’s bailout reform, much-needed bailout loan proceeds will be available to help pay debt and save the country from further fiscal misery. Creditors may be poised to approve the final proposal, but will do so with some trepidation.
A planned conference call between Tsipras, French President Francois Hollande, and German Chancellor Angela Merkel is a welcoming sign that all sides are willing to mitigate their differences, close the gap on demands, and agree to help struggling Greece rise above their indebtedness once and for all. To avoid defaulting on IMF payments and exiting the euro, Alexis Tsipras must agree to the “final draft” take-it-or-leave-it offer presented to him in Brussels. However, one major dilemma Alexis Tsipras faces may extended the time needed to decide on the plan: the Syriza Party may break up and pull any backing if the proposed settlement is taken.
Pension spending cuts, one of several proposed cutbacks by IMF, will be tough for Alexis Tsipras to agree to. Proposed pension cuts would be implemented by July, with a significant savings in GDP from.25 percent this year to.5 percent in 2016, another component of the plan. International creditors appear poised to keep labor markets safeguarded from sharp change, although a proposed plan would allow employees to be fired much quicker. Also, changes to Greece’s value added tax (VAT) would shrink their numerous categories down to two, which would draw more revenues than before. A complete 47-page outline was forwarded by Greek government officials, which included other components like primary surplus increases slated for review on Wednesday.
If repayment plan is accepted in its entirety, Greece would receive monies needed to pay International Money Fund payments coming due in June and July. However, should Alexis Tsipras accept all provisions of the international creditor’s plan, experts predict an all-out rebellion within the Syriza Party could commence. The party is scheduled to meet on Thursday to discuss aftereffects of the Brussels meeting and the much needed deal, although heavy opposition is expected during the meeting. Greece could run out of money to pay debts as soon as Friday.
Alexis Tsipras vows to continue to do what’s right for Greece’s general welfare, even if that means pushing government finances to the brink of nonexistence.