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Senior eurozone officials involved in the talks cautioned Mr Tsipras’s remaining demands in the letter werre “not a handful of minor changes” and would have “significant fiscal impact” and may not be acceptable to creditors.
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The letter was sent as eurozone central bankers were preparing on Wednesday to raise the heat on Greece and its banks by restricting their access to emergency loans, a decision that could topple at least one Greek bank.
Although the bailout’s expiry at midnight Tuesday night means the extension is no longer on the table, Mr Tsipras’ new letter, which marks a significant climbdown from his previous position, could serve as the basis of a new bailout in the coming days.
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Mr Tsipras’ letter says Athens will accept all the reforms of his country’s value added tax system with one significant change: keeping a special 30 per cent discount for Greek islands, many of which are in remote and difficult-to-supply regions.
Eurozone officails said keeping the exemption would significantly increase the size of the government’s budget shortfall and, more significantly, would perpetuate a highly complex VAT system. The complexity is one reason Greece has exceptionally low revenue from VAT.
On the contentious issue of pensions, Mr Tsipras requests that reforms passed in 2012 be implemented more slowly. He also requests that a special “solidarity grant” awarded to poorer pensioners, which he agrees to phase out by December 2019, be phased out more slowly than creditors request.
Eurozone officials said the changes, including making €400m in defence spending cuts in 2017 rather than this year, “could increase the fiscal gap by several hundred million at least”.
“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 [bailout] program and the new [third] loan agreement for which a request was submitted today, Tuesday June 30th 2015,” Mr Tsipras wrote. “As you will note, our amendments are concrete and they fully respect the robustness and credibility of the design of the overall program.”
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As the Greek financial system teetered, a poll showed a majority of Greeks would vote No in a snap referendum on Sunday on the terms of a previous bailout deal demanded by foreign lenders, although the lead has narrowed significantly after banks were closed this week.
In a hurriedly-organised conference call on Tuesday, eurozone ministers dismissed the unexpected request from Mr Tsipras rescue for a third bailout. The €29.1bn request, sent to the bloc’s €500bn rescue fund on Tuesday, was the latest twist in Greece’s acrimonious stand-off with its international creditors and took many in Brussels by surprise.
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