Roundup: Greece heads to last-minute debt deal, domestic reactions mixed

After an extraordinary eurozone summit on the Greek debt issue ended inconclusive on Monday in Brussels, Greece and its international creditors were locked in nonstop deliberations on Tuesday in a race to finalize a debt deal by Wednesday's new emergency Eurogroup meeting.

The 8-billion-euro (9 billion U.S. dollars) worth of fiscal consolidation and reform measures Athens tabled on Monday in the final stretch after five months of negotiations may avert the threat of a looming bankruptcy and possible Grexit, but Greek Prime Minister Alexis Tsipras will have a hard time passing the agreement in parliament in coming days, local media and analysts noted.

The Athens Stock Exchange opened with gains on Tuesday reflecting once again the contentment of part of Greek economy and society for the prospect of any deal that will stave off default.

The general price index rose by 2.6 percent compared to Monday when it skyrocketed by 9.0 percent. However, the market's euphoria was not widespread due to the heavy cost of the settlement, and these mixed reactions were mirrored in the front pages of Greek dailies on Tuesday.

"The road is open. A big step towards a solution -- The country stays in the euro zone" Imerisia (Daily) newspaper read. "Catastrophe for small businesses," Dimokratia (Democracy) counter argued.

"The government is very close to an agreement with creditors... The next 48 hours will be crucial... We should have an agreement within the week and I think that we are on a good course," government spokesman Gavriil Sakellaridis told Greek media on Tuesday.

The clock is ticking. On June 30, the extension of the second bailout the two sides agreed to in February expires. Also on June 30, Greece needs to make a 1.6-billion-euro loan installment repayment to the International Monetary Fund. With Greek state coffers almost empty, it would be difficult to avert a credit event with no agreement.

Sakellaridis said on Tuesday that the debt deal which outlines the terms of cooperation with lenders until 2017 should be voted on in the Greek parliament before June 30, as creditors requested, before any funds are unlocked.

In a message to Greek members of parliament (MP), he defended the painful set of measures Athens pledged to implement in exchange for the disbursement of further aid as a painful, but necessary, evil to overcome the crisis.

Nevertheless, the Greek official acknowledged that Greece's latest proposal, which foresees raising revenues mainly from tax hikes and savings in the pension system, was not very close to the ruling Syriza party's anti-austerity policy stance.

Critics of the proposal within the Greek business world, opposition parties, and some Syriza members, also disputed the claim. They argued that the proposed measures would lead Greece back to the vicious circle of recession and prolong the suffering of Greek people if the government did not secure a clear response by creditors on the debt relief issue and a strong growth program.

Amidst mounting domestic reactions that fuelled fears of political instability that could send all the latest efforts to keep Greece afloat off track, Sakellaridis issued a warning on Tuesday.

If Syriza deputies and legislators of the co-ruling right-wing Independent Greeks party don't back the deal and the five-month government loses parliamentary majority (Syriza currently holds 160 seats in the 300-member parliament), there would be no other option than to call snap general elections, he underlined.

Meanwhile, Independent Greeks party leader and Defense Minister Panos Kammenos said he would not vote in favor of scrapping a 30-percent VAT discount for the Aegean Sea islands.

In remarks to local media, Deputy Parliamentary Speaker and Syriza MP Alexis Mitropoulos said that "such antisocial" measures could not be brought to the assembly for approval.

Syriza lawmaker Yannis Michelogiannakis also rejected the proposals as catastrophic, claiming that a group of fellow Syriza MPs shared his view. At least two other Syriza MPs publicly warned of a vote down on Tuesday.

Greek Commerce and Entrepreneurship Confederation (ESEE) President Vassilis Korkidis warned that a proposed VAT hike on food service from 13 percent to 23 percent combined with an increase in the solidarity levy for households earning above 30,000 euros per year and other indirect pay and pension cuts would be an unbearable burden for sime small enterprises and households.

Athens Chamber of Commerce and Industry President Constantinos Michalos added that a planned increase on the corporate tax from 26 percent to 29 percent as of 2016 for companies with earnings of at least 100,000 euros annually would lead to more closures of enterprises.

Summarizing the climate in Athens, an editorial in Vima (Tribune) newspaper on Tuesday said, "As it turned out, after nearly five months wasted in an endless arm wrestling match with our partners, the government's negotiation position did not improve, but rather the cost of the agreement increased... However, it must be clear that any other choice would be catastrophic." Endite