Eurogroup Gives Greece 10 Day Ultimatum: Apply For Bailout Or Grexit - page 8
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Greece gets extra $1.1bn funding from ECB, has to prove trust
The European Central Bank has increased the emergency funds available to Greek lenders by $1.1 billion, in an attempt to keep Greece in the eurozone. But, euroarea officials have told Greece they have zero trust in its ability to deliver effective policy.
The European Central Bank on Wednesday increased the amount of money Greek banks can borrow under its emergency lending program to $77.8 billion, Bloomberg reported. The increase is the biggest this month since lenders lost access to normal ECB funding lines in February. The EU is currently holding back crucial financial aid as the European Commission has made $2 billion of unused funds available to Greece to help the country avert a cash crunch.
The ECB told Greek banks late Tuesday not to buy any more Greek government debt. The so-called Troika of lenders, the ECB, IMF and European Commission require the country to stick to the austerity measures already agreed upon and complain Prime Minister Alexis Tsipras hasn’t convinced them his economic plan can meet their requirements. Greece needs to show by Monday it can deliver detailed reform proposals after finance ministry deputies reviewed the situation on a Wednesday conference call.
The international lenders are trying to keep Greece in the single currency block; however, the risk of a serious political accident that could see Greece out of the euro is growing.
“It would be tragic if Greece gives up the reform process now and its achievements are thrown away,” ECB council member Jens Weidmann, the Bundesbank chief, was cited by Bloomberg as saying in Munich on Wednesday.
European Central Bank council member Yannis Stournaras urged the Greek government to act quickly to agree on reforms with the country’s creditors as he thinks that a Greek exit from the euro isn’t an option and wouldn’t help the country’s economy in the long-term.
“Grexit would deliver no benefit but a lot of pain. The new Greek government has a unique opportunity to implement bold structural reforms, which would be backed by a large majority of the political forces in the country,” Stournaras said in London, according to Bloomberg.
The Greek government is facing a serious challenge with a $501 million of IMF loans to be repaid in early April and another €768 million falling due the next month. Greece has to begin €1.5 billion monthly pension and salary payments this week. Meanwhile, European officials say Greece could run out of funds within weeks.
Greece should act faster for its actions to be more effective, suggests Jeroen Dijsselbloem, who heads the eurozone finance ministers’ group. “The main problem is the same in every country in Europe: getting things done,” Bloomberg reported him as saying in Rotterdam on Wednesday.
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Greece Continues Talks With Creditors, Needs More Time
The Greek government has said that it sent a new list of reform proposals on Friday night. The new measures are expected to raise €3 billion, while they exclude "recessionary measures" such as wage and pension cuts. Apart from earlier suggestions, the fresh 18-point plan includes concrete measures to fight tax evasion, privatizations, a luxury tax and higher taxes on alcohol and cigarettes.
The fresh document is being scrutinized by Greece's creditors: the European Commission (EC), the European Central Bank (ECB) and the International Monetary Fund (IMF) before final approval by the Eurogroup (euro zone finance ministers) which would unlock the new funds for Greece.
Athens and its lenders agreed an extension to its €240 billion international rescue program but the funds will be locked until the Greek government submits a set of reforms for Eurogroup approval.
However, the creditors technical working teams said the latest list of proposals was more a collection of ideas not specific enough in their current form to be presented to the Eurogroup.
"Greece did not submit a reform list on Friday. They just showed some ideas over the weekend. The discussions from Friday to Sunday were meant to help the Greeks prepare a list for tomorrow," a senior euro zone official was quoted by Reuters. "We still look forward to receiving something on Monday," the official said.
"As they stand, they lack detail and much more technical work will be needed for them to flesh them out into something sufficiently comprehensive and credible to be put to the Eurogroup," another euro zone official told the news agency.
Time is tight
While the Greek government has been quite upbeat in its expectations of a possible quick resolution while officials representing Greece and its lenders started talks discussing the reform proposals over the weekend, chances for a Eurogroup meeting in the next couple of days have been reduced.
"I would guess several more days. It would not be in Greece's interest to submit something which is not going to fly. Better to take time to prepare it properly," the EU official said.
European Commission Vice President Valdis Dombrovskis said in an interview for German Die Welt published on Monday that the EU expected the reform list at the start of the week.
"It is clear that we need to make progress. We have wasted too much time trying to sort out technical issues," the EC vice president said.
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You missed the part Greece needs to pay the IMF money next week and at the moment they don't have that money lol It's something like 450 million euros. The reason why these reforms are not unaccepted is because Tsipras is refusing more austerity.
You missed the part Greece needs to pay the IMF money next week and at the moment they don't have that money lol It's something like 450 million euros. The reason why these reforms are not unaccepted is because Tsipras is refusing more austerity.
You mean why they are not accepted (not "not unaccepted")
The "austerity" theory if filled with holes : how can you increase inflation (since they claim that there is no inflation in the EU) if you do not gove people money to spend?
The reason for "austerity" and now QE has nothing to do with the official reasons. Ask the US middle class
Greece sets sights on deal, denies to delay IMF payment
Greece hopes to reach a deal with its international lenders next week and has no plans to delay a repayment to the IMF, the government said on Wednesday, seeking to calm mounting fears that the country will default.
Greece is weeks away from running out of cash but its euro zone and International Monetary Fund lenders have frozen aid until it implements reforms, with talks bogged down over what measures the leftist-led government must take.
A payment to the IMF of about 430 million euros($463.36 million) due on April 9 is shaping up to be the next financial test for Greece, which is already resorting to last-ditch measures like borrowing from state entities to tide it through the cash crunch.
In an interview with German daily Der Spiegel, Interior Minister Nikos Voutsis said that if foreign creditors do not send Athens further funds by April 9, the government would first pay salaries and pensions and then come to an agreement with lenders on paying the IMF late.
Prime Minister Alexis Tsipras's government, which was elected in January on promises to ease the terms of the bailout and cut debt, denied the comments represented its stance.
"There is no chance that Greece will not meet its obligations to the IMF on April 9," government spokesman Gabriel Sakellaridis told Reuters.
Labor Minister Panos Skourletis said a planned visit by Tsipras to Moscow next week was "to find out whether our historic friendship with Russia can be stretched to other levels", German newspaper Die Zeit reported.
"We'd like to stay on the ship called Europe," Skourletis was quoted as saying. "But if the captain pushes us overboard, we need to try to swim."
But Athens would only reveal what role Russia might play "if nothing works anymore", Skourletis added.
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'No Chance' to Miss IMF Payment, Athens Says. What If?
In an interview with German magazine Der Spiegel, Greece's Minister of Interior Nikos Voutsis suggested that if international creditors do not disburse further funds by April 9, the government would first cover salaries and pensions and then seek an agreement with lenders on paying the International Monetary Fund (IMF) later.
A payment to the IMF of about €458 million is due next Wednesday and may the next difficult test for Greece already scraping the last funds available including borrowing from state entities to get through the severe cash crunch.
However, the Prime Minister Alexis Tsipras' government was quick on Wednesday to say that the comments did not represent its views.
"There is no chance that Greece will not meet its obligations to the IMF on April 9,'' government spokesman Gabriel Sakellaridis said, adding that said that the administration "continues to specify reforms and hopes for positive outcome at a Eurogroup meeting."
What if?
Not paying the IMF is usually an action taken only by war-torn countries or those on the sidelines of the international system including severely underdeveloped economies.
No country has defaulted on the IMF in its 70-year history, but there have been a number of late payments. In addition, there continues to be a sizeable amount of arrears with the IMF outstanding.
The details of procedures in such cases are corroborated in IMF’s Strategy on Overdue Financial Obligations and in the Timetable of Procedures. According to the documents, the process of dealing with such issues can take up to two years.
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Greece Said To Prepare "Grexit", Drachma, Bank Nationalization Plans
Greece is drawing up drastic plans to nationalise the country's banking system and introduce a parallel currency to pay bills unless the eurozone takes steps to defuse the simmering crisis and soften its demands.
Sources close to the ruling Syriza party said the government is determined to keep public services running and pay pensions as funds run critically low. It may be forced to take the unprecedented step of missing a payment to the International Monetary Fund next week.
Greece no longer has enough money to pay the IMF €458m on April 9 and also to cover payments for salaries and social security on April 14, unless the eurozone agrees to disburse the next tranche of its interim bail-out deal in time.
“We are a Left-wing government. If we have to choose between a default to the IMF or a default to our own people, it is a no-brainer,” said a senior official.
“We may have to go into a silent arrears process with the IMF. This will cause a furore in the markets and means that the clock will start to tick much faster,” the source told The Telegraph.
Syriza’s radical-Left government would prefer to confine its dispute to EU creditors but the first payments to come due are owed to the IMF. While the party does not wish to trigger a formal IMF default, it increasingly views a slide into pre-default arrears as a necessary escalation in its showdown with Brussels and Frankfurt.
The view in Athens is that the EU creditor powers have yet to grasp that the political landscape has changed dramatically since the election of Syriza in January and that they will have to make real concessions if they wish to prevent a disastrous rupture of monetary union, an outcome they have ruled out repeatedly as unthinkable.
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That would be something : imagine the Drachma announced and what would happen to Euro (regardless of what they are telling now)
6 Days for Greece to Clinch a Deal: Euro Working Group
The Euro Working Group (EWG - comprised of euro zone deputy finance ministers) gave the Greek government a six working day deadline to present revised reform proposals. The final document could be approved at a regular Eurogroup meeting scheduled for April 24.
"A deadline of six working days was given to the Greek side to present proposals that can be acceptable by creditors," the Greek Kathimerini daily said on Thursday morning.
The EWG and Greece's officials held a teleconference on Wednesday evening.
According to sources, Greece was willing to discuss additional spending cuts aimed to reduce waste in the public sector but disagrees with reductions in wages and pensions.
Athens submitted a 26-page list of reform proposals last week, covering a wide range of issues including taxation, the public sector, labor market and healthcare reforms among other areas. The list also includes tax evasion measures, creation of a bad bank for non-performing loans, and privatizations worth €1.5 billion in 2015.
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Schaeuble, Varoufakis see little common ground on Greek aid
Little common ground was found in back-to-back speeches from German Finance Minister Wolfgang Schaeuble and Greek Finance Minister Yanis Varoufakis ahead of tumultuous negotiations on the terms of international aid for Greece.
Both officials were speaking at the Brookings Institution ahead of the International Monetary Fund and World Bank spring meetings, where Greece is at the top of agenda. The fear is that a possible Greek decision not to repay aid could trigger an exit from the eurozone and possibly financial contagion.
Varoufakis said Thursday that Greece wants to reach a deal by the end of June.
Varoufakis said it would be “wrong” to accept the memorandum of understanding as he questioned the terms of the austerity package that he says has led to a Great Depression in his country. The unemployment was 26.1% in the fourth quarter, according to the Greek statistics agency.
He went so far as to say a Ponzi scheme of borrowing has led to a Ponzi scheme of austerity.
Varoufakis said the election of the Syriza party has given it the mandate to be heard and for “time and space” to come up with other ideas.
He picked apart various aspects of the existing austerity package, saying he was against privatizations that were fire sales. “I don’t think even [former British Prime Minister Margaret] Thatcher would do privatizations the way the previous government did,” he said.
He said he was hoping not meet European partners halfway but “one fifth of the way.”
Schaeuble meanwhile insisted that Greece live up to existing commitments, as did International Monetary Fund Managing Director Christine Lagarde earlier in the day. But Schaeuble did make clear that Germany did not wish to push Greece out of the eurozone.
A euro exit “is only a decision of Greece,” Schaeuble said.
Schaeuble said other eurozone countries that underwent austerity, including Ireland and Spain, are starting to see growth pick up. Varoufakis answered that’s because Greece has seen the harshest austerity terms.
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