European Councilp president Donald Tusk has said Greece's creditors should consider debt sustainability if Athens tables realistic reform proposals, something it is meant to do by midnight today. "The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation”, Tusk said on Thursday (9 July), after speaking with Greek leader Alexis Tsipras by phone earlier in the day.
The comment comes on top of a widely publicised report by the International Monetary Fund (IMF), one of Greece's creditors, which also said the country's debt mountain is hindering growth. IMF chief Christine Lagarde repeated the stance on Wednesday, saying that while Greece needs structural reforms and fiscal consolidation, "the other leg is debt restructuring, which we believe is needed in the case of Greece for it to have debt sustainability”. Debt sustainability - along with the various formats for getting there - has been a central sticking point for the Greek government, which says it cannot support its debt. Germany, Athens' biggest eurozone creditor, has already rejected an outright debt write-off as illegal under the EU treaties, amid a general hardening of euro countries' attitudes to the Tsipras government. The hardening came after Tsipras called a snap referendum on creditors' terms, resulting in a rejection of them by Greek citizens. Since then, creditors have insisted Greece will have to commit to more reforms as the economic situation has deteriorated further, amid closed banks and capital controls, now in place for over a week.
Greece, for its part, asked for a three-year bailout on Wednesday, with the European Commission and the European Central Bank currently looking at whether it is eligible for a further (third) loan.
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