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Greece latest: Eurozone ministers to make 'major' decision tomorrow

The country is looking for a €53 billion bailout.

EUROZONE FINANCE MINISTERS will make a ‘major’ decision tomorrow on the latest proposals from Athens on a fresh bailout plan, Eurogroup chief Jeroen Dijsselbloem has said.

“We have to make a major decision. Whichever way,” Dijsselbloem, who is also the Dutch finance minister, told reporters ahead of a cabinet meeting in The Hague.

Broad support within the Greek parliament would also “give the proposals more credibility”, Dijsselbloem said after Athens laid out a last-ditch reform plan in a bid to stave off financial collapse and exit from the eurozone.

“But we have to see whether the proposals will genuinely help pull Greece from the doldrums,” Dijsselbloem added, two days ahead of a summit of EU leaders.

He confirmed the proposals were being studied by Greece’s creditors, saying they were expected to issue a statement later today.

But he said he would wait for the European Commission, IMF, the European Central Bank’s verdict first before making any comments.

Europe Greece Bailout Dutch Finance Minister and chair of the eurogroup Jeroen Dijsselbloem. Source: Associated Press

“I’ll keep my final judgement for later. I’ll first await the verdict from these institutions,” Dijsselbloem said.

European Commission spokesman Margaritis Schinas earlier told a press conference that Jean-Claude Juncker, Christine Lagarde, Mario Draghi and Dijsselbloem would discuss the plan in a conference call this afternoon.

Greek Prime Minister Alexis Tsipras handed in the package to the creditors just two hours before a midnight deadline last night.

The proposals set out in a 13-page document concede to Greece’s paymasters several key points that Tsipras’s ruling coalition — and Greek voters — had previously fiercely opposed.

A make-or-break summit bringing together leaders of all 28 EU nations, not just the 19 that use the euro, is due to be held on Sunday.

Greece is looking for a €53 billion bailout – and here’s what they’re willing to do in return:

VAT

Greece has proposed reforming its Value Added Tax (VAT) regime — a key bone of contention in the talks — in the hope of raising revenues by 1% of gross domestic product (GDP).

The new regime would unify rates at a standard 23%, including for restaurants and caterers which currently enjoy 13%. Basics such as food, energy and water will be set at 13%, while for medical supplies, books and theatre will be taxed at 6%.

Abolish island tax breaks

The government has proposed reducing financial advantages offered to Greece’s islands, including abolishing a 30% VAT break in place for several years.

This would start on the wealthiest islands in October and those most popular with tourists and be completed by the end of 2016.

Raise other taxes

Corporate tax would be raised from 26% to 28% — meeting the demands of Greece’s creditors but below the 29% initially put forward by Athens.

Taxes on luxury items would also be raised and a tax on television adverts would be introduced.

Pension reform

The age of retirement would be fixed at 67 years, or 62 for people who have made 40 years of contributions by 2022. Athens said it would also “create strong disincentives to early retirement” including adjusting early retirement penalties.

Cuts to military spending

Athens is offering to cut €100 million ($122 million) from its military budget this year and €200 million in 2016 by reducing headcount and procurement. Creditors had asked for a €400 million reduction.

Tax dodging

The Greek government has put forward measures to clamp down on tax evasion, a huge problem there, and to streamline its tax collection systems.

Greece Bailout Greece's Prime Minister Alexis Tsipras Source: AP/Press Association Images

Administrative reform

Consultants will be brought in to assess civil servants and a series of measures are planned to modernise the public sector.

Privatisation

The Greek government plans to sell the state’s remaining shares in Greek telecoms giant OTE and commit to privatising the ports of Piraeus and Thessaloniki no later than October.

Greece Bailout Source: AP/Press Association Images

Budget targets

Athens had initially agreed with its creditors’ demands to cut its primary surplus to 1% of GDP this year, followed by 2% in 2016 and 3.0% in 2017.

However, on Thursday Greece indicated these targets would need to be re-examined in light of the dire economic conditions gripping the country, including the impact of capital controls and the shutdown of the banking system.

Public debt

Greece has also promised to rein in its public debt, currently 180% of GDP, according to a government source who gave no further details on the thorny topic.

Helping recovery

A package of €35 billion to help boost Greece’s economic growth has already been put on the table by the European Commission, according to a Greek government source.

Read: The EU have now officially received Greece’s bailout proposals

Related: Greece latest: Prime Minister makes formal request for third bailout

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