Prime Minister Joseph Muscat said eurozone countries took a harsher stand with Greece  after it was proposed that it transfers €50 billion of state assets into a fund to be managed by an independent agency so the country can pay off its debts while half the funds will be put towards recapitalisation of banks.

Briefing parliament on the last eurozone meeting last weekend, which saw eurozone leaders negotiate day and night on Greece’s third bail-out request, Dr Muscat said that this proposal was the one which mostly attracted attention.

“Over a period of three years, Greece would have to transfer these state assets. Greece would then utilise this money to fund the recapitalisation of banks – half the amount would be allocated for this cause – while the rest would be utilised to pay off their debts," he explained.

Dr Muscat cast doubts whether this amount could be reached though. He said that the amount would only serve as a target since it was far-fetched.

As for Greece’s debt haircut request, he said eurozone countries argued  that if the amount mentioned above will be achieved, there won’t be a need for haircuts.

Greece’s proposal was the same as the one it refused two weeks before

“The time the Greek government lost by refusing the orginal package led to its economic situation to worsen. The proposal was the same one it turned down some two weeks ago but I will not enter the merits to why the Greek government acted in this way,” he said.

The next step, Dr Muscat explained, is that on Wednesday (tomorrow) Greece’s parliament has to approve a set of measures, including implementing changes to VAT and its pension system, and in the event it fails in its budgetary aims, spending cuts would have to follow.  

If Greece implements these measures,  eurozone countries will consider starting to negotiate so that the process leading to Greece’s third bail-out will kick in, Dr Muscat said.

He said that he agrees with PN deputy leader Mario de Marco’s words that the Greek population suffered humiliation.

PN MP Robert Arrigo asked the Prime Minister whether Malta was going down the same road as Greece since Air Malta was requesting loans from state-owned Bank of Valletta. “I would worry if Maltese banks failed their stress tests, which they did not,” Dr Muscat said. “Standard & Poor’s positive outlook for Malta speaks for itself,” he added.