Greece’s lenders no longer believe the Eurozone will be hurt if Greece is forced to leave and almost don’t care at this point, tired of seeing loan money go down the drain.
Some excerpts of international reporting:
Greece Wasn’t Counting On This Surprise
Wall Street Journal
When Greece’s government struck a deal with creditors last month to extend its bailout, we warned that the next Greek crisis would come when that four-month agreement ran out and Athens’s failure to reform triggered a new crunch. Turns out we were optimistic. It took Greece barely four weeks to roll back to the cliff.
Athens could run out of cash in mid-April, as tax revenues plummet and creditors withhold the last €7.2 billion in financing under the current bailout.
Should Athens somehow avoid defaulting on a repayment due to the International Monetary Fund and a rollover of treasury bills next month, it still would need a third bailout after June since the government has scared off the private investors who might have bought Greek debt.
Release of the last of the current bailout, the conclusion of a new deal, and private financing all look less likely the longer the Syriza party remains in power.
That’s because in the four weeks since last month’s deal, Prime Minister Alexis Tsipras has failed to deliver his promised reform agenda.
Athens also backtracked on a central commitment of the February deal—a pledge not to implement major fiscal policies without consulting creditors—by unilaterally legislating food stamps and free electricity for low-income Greeks.
The surprise for Syriza is that its lack of seriousness about reform is matched by a growing conviction among European policy makers and investors that Greece’s departure from the eurozone wouldn’t trigger a broader crisis.
Bond yields have stayed low elsewhere in the eurozone throughout the negotiating chaos since January’s election. Europe is growing bored with Greece’s economic tragedy and especially its political farce.
Greece Bid For Early Cash Release Fails
Reuters – Jan Striupczewski and George Georgiopoulos
Greece failed in a bid on Wednesday to secure a quick cash payment from the euro zone rescue fund to help stave off potential bankruptcy next month, raising pressure on Athens to deliver a convincing reform program within days.
Athens had appealed for the European Financial Stability Facility to return 1.2 billion euros ($1.32 billion) it said it had overpaid when it transferred bonds intended for bank recapitalization back to the Luxembourg-based fund this month.
But senior Euro zone officials agreed in a telephone conference on Wednesday that Greece was not legally entitled to the money, although they said they would consider how to deal with the issue in the future.
The decision by the Eurogroup Working Group was a setback for leftist Prime Minister Alexis Tsipras, who is struggling to secure fresh funds to keep his government afloat while he presents a comprehensive reform plan and argues for debt relief.
A source familiar with Greece’s financial position told Reuters on Tuesday Athens would run out of money on April 20 without new cash.
EU paymaster Germany, to which Tsipras made a fence-mending visit this week after weeks of acrimony between Athens and Berlin, was among the countries that opposed handing back the 1.2 billion euros.
“We see no reason to release it,” German Finance Ministry spokesman Martin Jaeger told a routine news conference, adding that EFSF funding was made available to Greece last year as a safeguard during bank stress tests but had not been needed.
Greece Liquidity Going Down The Drain
A prominent German newspaper has reported that Greece has enough liquidity to last roughly two more weeks. If Athens fails to submit viable reforms by then, Brussels will reclassify the country’s finances as “critical.”
According to the Sunday edition of the Frankfurter Allgemeine Sonntagszeitung (FAS), EU Commission experts in Athens have confirmed that the country’s coffers would be able to finance salaries and wages until the second week of April.
The Commission’s estimates presume that the Greek government will have to dip into the country’s social insurance fund and state-owned enterprises in order to continue paying government employees, diplomatic sources told FAS.
From April 9, Greece must repay a 467-million-euro ($505-million) loan to the International Monetary Fund (IMF). It must also refinance short-term government bonds in the days following the IMF deadline.
Greek Prime Minister Alexis Tsipras must also convince Brussels in approximately the same time period that his government, which first came to power in January, can implement effective reforms. Doing so will unlock 7.2 billion euros for the crisis-stricken country, the final tranche of its 240-billion EU-IMF loan.
Greece Stuck With The Worst of All Worlds
Wall Street Journal – Allen Mattich
There’s a pointed irony to the fact the Greeks are celebrating independence just hours after the the European Central Bank turned the screws yet another notch on the country’s government.
The ECB reportedly told Greek banks late Tuesday not to buy any more Greek government debt. But the Greek government is said to be mulling issuing short-dated T-bills to cover a coming cash crunch.
With €460 million ($501 million) of IMF loans to be repaid in early April and another €768 million falling due the next month, together with €3.8 billion of short-dated Treasury bills needing to be rolled over in the intervening period, and with tax revenues falling short in recent months, by its own admission, the Greek government faces a serious cash squeeze.
With the wider market taking a skeptical view of Greek government debt–two year Greek government bonds yield 19.26%, suggesting investors are seriously concerned about default–the Syriza administration will be looking to domestic banks to make up the shortfall.Source: The National Herald