After weeks of back-and-forth bluster with international lenders over failure to implement reforms, it looks like this could be the end for Greece, world press reports say.
Greece’s Moment of Truth: Default Looms June 5
Reuters – Renee Maltezou and Angeliki Koutanou
Greece cannot make an upcoming payment to the International Monetary Fund on June 5 unless foreign lenders disburse more aid, a senior ruling party lawmaker said on Wednesday, the latest warning from Athens it is on the verge of default.
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Prime Minister Alexis Tsipras’s leftist government says it hopes to reach a cash-for-reforms deal in days, although European Union and IMF lenders are more pessimistic and say talks are moving too slowly for that.
Greek officials now point to a race against the clock to clinch a deal before payments totalling about 1.5 billion euros (US$1.7 billion) to the IMF come due next month, starting with a 300 million euro payment on June 5.
“Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5,” Nikos Filis, spokesman for the ruling Syriza party’s lawmakers, told ANT1 television.
“If there is no deal by then that will address the current funding problem, they won’t get any money,” he said.
Talks between Greece and its lenders have foundered on Athens’ demand to roll back labour and pension reform as well as lower fiscal targets set under its bailout program.
Among concessions Athens is mulling is a special tax on banking transactions to help raise revenue to meet fiscal targets, though discussion of the levy is at an early stage, two sources close to the talks said.
If the talks collapse, Tsipras’s government has made clear it will pay pensioners and public workers before servicing debt.
Euro Under Pressure if Greece Misses IMF Payment
The Guardian – Larry Elliott, Economics Editor
The euro has come under pressure on the foreign exchanges after leading Greek politicians warned the country would be unable to make its next debt repayment to the International Monetary Fund (IMF) on 5 June without a rapid deal with its creditors.
At the start of a crucial two-week period for Greece, the credit rating agency Moody’s said there was a high and increasing risk that the crisis stricken country would have to impose capital controls to stem capital flight from its banks.
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The first hints of measures to prevent bank runs came as Reuters reported that the Syriza-led coalition in Athens was considering imposing a transaction tax on bank customers.
With the European central bank discussing whether to expand emergency lending to Greece, the single currency lost fresh ground against the US dollar – extending this week’s fall to 3%.
Investors are becoming alarmed at the prospect – fuelled by signs of a split in Syriza’s ranks – of Greece running out of money, defaulting on its debts and leaving the single currency.
Nikos Filis, the parliamentary speaker, said the IMF would not get the €305m (£218m) due in two weeks unless creditors unlocked some bailout funds.
Stressing that the government would prioritise wages and salaries over repayments to Greece’s creditors, Filis said: “Now is the moment that negotiations are coming to a head. Now is the moment of truth, on 5 June.
“If there is no deal by then that will address the current funding problem, they won’t get any money.”
Filis’s comments were echoed by Thanassis Petrakos, Syriza’s parliamentary spokesman, who said the country would not suffer if it reneged on its debts.
History Tells Us How Greek Drama Will End
CNBC – Holly Ellyatt
As uncertainty over Greece’s financial situation weighs on global markets, past crises in emerging markets (EM) paint a gloomy picture of how things might pan out for the country, a top Commerzbank analyst told CNBC Wednesday.
Simon Quijano-Evans, head of emerging-markets research at the German bank, said that those worried Greece could be about to default on its debts should take note of EM crises in Latvia in 2008, Turkey in 2001, Argentina in 1999 and Thailand in 1997.
Greece is actually in a worse position than those countries were when they faced a default, he argued.
“In spite of Greece having taken more painful adjustment measures than EM peers, public sector debt/GDP (gross domestic product) remains at an excruciating 175 percent, real GDP has failed to recover meaningfully, deposit withdrawals continue and unemployment pressure remains,” Quijano-Evans said in a note on the subject published last week.
Greece was not in a position to reduce its debt/ GDP, he added, and could be reaching the point where its only option was for it to leave the euro zone.
His comments come amid deep uncertainty over whether Greece can avoid bankruptcy and default. The country remains embroiled in reforms-for-aid talks with lenders, and a deal– that could release a vital 7.2 billion euros ($8 billion) worth of aid – seems some way off.
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