Greece delivers reform plan to EU, warns on cost of failure

Tue Jun 9, 2015 7:15am EDT Related: ITALY, GREECE

ATHENS/BRUSSELS | BY RENEE MALTEZOU AND JAN STRUPCZEWSKI

Reuters

Greece handed its creditors new proposals on unlocking funds to keep the country from default, with Prime Minister Alexis Tsipras offering hope for a deal and warning the cost of failure would be enormous.

The reform proposals mark a further attempt by Tsipras to compromise with lenders as time runs out to reach a deal to prevent his country going bankrupt.

Indicating a more conciliatory mood as he prepares to meet German Chancellor Angela Merkel and French President Francois Hollande on Wednesday, Tsipras agreed to increase the rate of Value Added Tax and proposed higher budget surplus targets to bridge the gap with lenders.

Greece's bailout program with the European Union and IMF expires at the end of this month, and Athens must make big debt repayments by then that may be impossible without funds from its creditors.

In an Italian newspaper interview published on Tuesday, Tsipras adopted a more conciliatory tone than last Friday, when he dismissed as "absurd" his creditors' offer of cash in return for promises of further reforms and austerity.

Signaling room for compromise, he singled out Greece's budget surplus before its debt repayments, which Athens wants to keep as low as possible to free up funds to help a population that has suffered badly during five years of economic crisis. But he showed no sign of yielding to the creditors' demands that Athens cut pensions.