27th Jun 2015 08:03
ATHENS (Alliance News) - Greece's parliament is due to hold an emergency session at 12 pm on Saturday regarding the government's plan to hold a referendum on a controversial bailout deal with the country's international creditors.
The session comes after Prime Minister Alexis Tsipras announced late Saturday that his government will put the creditors' proposal to a popular vote on July 5. The government has enough lawmakers to carry the vote.
"The question will be acceptance or rejection of [the creditors'] proposal" for a new deal, Tsipras said in a televised speech early Saturday.
His government had already said on Friday that it rejected the latest proposals from the institutions overseeing the country's bailout - the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF).
Later on Saturday, eurozone finance ministers were expected to meet in Brussels for what had been billed as a last attempt to reach a mutually agreed deal.
Development Minister Panagiotis Lafazanis urged Greeks after the late-night cabinet meeting to vote against the creditors' proposal.
"The answer of the Greek people will be a resounding no," he told reporters in his comments that were broadcast by state TV ERT. "All Greeks will vote no."
State Minister Nikos Pappas echoed the sentiment. "It will all go well. Our people will vote no, you will see," he said.
"Memorandum, forget it," read the front page headline in Avgi newspaper, which is aligned to Tsipras' leftist SYRIZA party.
"Bankruptcy referendum" was the headline in the conservative newspaper Eleftheros Typos.
The surprise announcement follows days of frantic negotiations between Athens and its creditors in Brussels over reforms required to unblock 7.2 billion euros (8 billion dollars) in remaining bailout funds for Greece.
"The partners have given us an ultimatum to accept more burdensome austerity," Tsipras said, adding that the institutions had the intention of humiliating the Greek people.
Tsipras said he would accept the vote of the people. Greece will apply on Saturday for a short extension of the ongoing aid programme. Failure to pay the IMF will mean Greece will go into arrears, but not default, analysts say.
Athens was offered an extension to its bailout programme through November, with loans worth 15.5 billion euros, already set aside for Greece by the eurozone's bailout fund, the IMF and a central bank programme involving the purchase of Greek bonds - including the 7.2 billion euros in remaining bailout funds.
The negotiations are now down to the wire. The European share of Greece's bailout is set to expire on Tuesday - the same day that Athens must honour a 1.6-billion-euro debt repayment to the IMF.
Without a deal, Athens risks losing access to all remaining bailout aid. Fears are rife that the country would then go bankrupt and be propelled out of the eurozone.
Eurozone finance ministers will hold a new round of crisis talks from 2 pm (1200 GMT) on Saturday - their fifth meeting of the kind in 10 days.
A marathon of negotiations this week between Tsipras and top creditor officials had failed to resolve differences over reforms.
Pension savings and value-added tax changes are believed to be among the most controversial issues, along with Greek demands for debt relief.
The creditors were said to have put an offer on the table to extend the European part of Greece's bailout until November, but the Greek news agency ANA-MPA reported Friday that this was rejected by Athens.
Analysts say the referendum decision has increased uncertainty in the country.
"With Tsipras' move, Greece has entered entirely unchartered waters," Wolfango Piccoli, Managing Director of Teneo Intelligence wrote in a note.
Piccoli added that the risk of Greece exiting the eurozone "has increased considerably, from previously 20% to at least 50%."
He said, "Avoiding capital controls next week will be very difficult, if not impossible."
Greek news website News247 published a photo of some people queuing up outside a cash machine, but on the quiet streets of Athens early Saturday morning there were no signs of panic.
Copyright dpa