Here We Go Again: EU Rejects Greek Proposal
Business + Economy

Here We Go Again: EU Rejects Greek Proposal

European leaders used unusually harsh language in criticizing the Greek government Monday, accusing them of “wasting time” with inadequate proposals for fiscal reform. The news that the European countries that have twice bailed out Greece’s faltering economy will not accept the terms proposed by Greece on Friday for an extension of its financing deal raised the possibility, yet again, of a Greek exit from the Eurozone. 

On Monday, after a meeting of the Eurogroup, the group’s president, Dutch Finance Minister Jeroen Dijsselbloem, said that time is running short for Greece to propose a deal acceptable to its creditors. The Eurogroup is made up of the finance ministers of the 19 countries participating in the European Monetary Union.

Related: Greece Continues Game of Chicken with EU Creditors

“We have to stop wasting time and really start talks seriously,” he told reporters.

The newly-elected Greek government was swept to power after having promised voters that it would do away with the harsh austerity measures imposed on the country’s economy by its European creditors as a condition for the receipt of financial assistance.

After a weeks-long standoff, the Eurogroup members voted to approve additional aid that included some adjustments to the program, contingent on the ability of Greece to present a plan acceptable to its creditors.

Last week, the Greek government presented a proposal that, among other things, would offset increased social spending by cracking down on tax evasion. One of the proposals was to hire tourists to assess whether or not merchants were correctly applying the country’s value added tax to the items they sell. 

Related: The Problem with Greece Is that It Isn’t Just Greece 

The proposal was slapped down by European authorities, who called it inadequate, leaving questions about the future of the Greek bailout. The country’s banks appeared to be stabilizing after the announcement of a preliminary deal. However, the failure to conclude an agreement could spark more capital flight, as Greece looks increasingly likely to be granted its next scheduled disbursement of funds from the lending facility set up by the Eurogroup and its representative countries. 

One proposal is to encourage consumers to demand receipts from merchants by creating a national lottery in which receipts documenting taxes paid would function as tickets.

Some of the members of the Eurogroup, especially Germany, have been increasingly frustrated by the unwillingness of the Greek government to give in to pressure from its creditors.  Germany’s official position is that it wants Greece to remain part of the Eurozone.

However, according to Reuters, individuals close to the government have begun suggesting that a so-called “Grexit” in which Greece reverted to its old currency, the drachma, might actually be a better result.

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