Even if Greece reaches an agreement with its international lenders, it’s still too late for a country buried with debt, poverty and unemployment, world press reports say.
Deal or Not, Greece Still Faces Bankruptcy
CNBC – Hollly Ellyatt
Despite hopes that Greece and its lenders will come to some agreement in May, not everyone is convinced that a deal – which could unleash a last tranche of much-needed bailout aid — can resolve the country’s looming debt problem.
Talks over reforms Greece has to make in return for aid continued this weekend after months of wrangling which have led to growing fears that the country could default, or even exit the euro zone – a scenario dubbed a “Grexit.”
“I think the end of the road is still bankruptcy for Greece,” Steen Jakobsen, chief economist at Saxo Bank, told CNBC Monday. “Whether it becomes a Grexit is a different story but I think they’re just playing for time.”
He added that the Greek problem likely had two solutions.
“(Firstly) by defaulting, which I think will happen in the bankruptcy case. Or you can grow yourself out of it,” Jakobsen said. “But in no shape or form is Greece willing or able to enact a program that is going to set growth in motion.”
The comments come after several days of technical talks between Greece and the so-called Brussels Group, made up of the bodies overseeing Greece’s bailout program, the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission.
Talks are to resume Monday, according to Greek government spokesman, Gabriel Sakellaridis. Speaking at a press conference, he added that “significant progress” had been made in talks with lenders and that a broader agreement could be arrived at by the end of May or mid-June.
Greece’s Undeclared Default Takes Hold
BBC – Giorgos Christides
When will Greece run out of money? The question has been vexing European capitals and the markets for months, as the stand-off between the new government in Athens and its eurozone creditors remains unresolved.
So far, Greece has managed to both service its external debt and pay for wages and pensions.
But the worst kept secret in the country is that for thousands of people, businesses and institutions relying on government pay cheques, in every practical sense, Greece is already out of money.
Greece has not received any loans from the eurozone or the IMF since August 2014.
There is €7.2bn (£5.3bn;$8bn) left in the country’s bailout program, but creditors refuse to release the money before their demands for further reforms, spending cuts and tax increases are satisfied by Athens.
The Greek government, led since January by the leftist Syriza party of Prime Minister Alexis Tsipras, is refusing to “violate its anti-austerity mandate”.
Without loans from official creditors or access to the international bond markets, Greece has so far covered its financing needs by resorting to extraordinary and controversial measures.
These have included the forced transfer of the cash reserves of public sector entities such as regional governments and pension funds to the central government’s coffers.
“We are now running one month behind on our salaries. Until only recently we were two months behind, and no-one would tell us if and when we would get our next pay cheque,” an office employee at a cultural institution funded by the state budget told the BBC.
The cash crunch is felt even even by public institutions as sensitive as hospitals. A junior doctor told the BBC that although wages were paid regularly to medical staff, the government was more than four months behind on payments for on-call time.
“Last week we got paid on-call time for the month of December,” she said.
Hospital suppliers that provide healthcare units with everything from bandages to dialysis machines warned last week that they may be forced to stop supplying hospitals.
Greek Talks Stall Over “Red Lines”
The Telegraph – Szu Ping Chan
Talks between Greece and its creditors have stalled after the two sides failed to reach an accord on reforms needed to unlock vital financial aid and secure the country’s future in the eurozone.
Following days of intensive negotiations, government spokesman Gabriel Sakellaridis told reporters that he was still confident a deal would be struck, even though the International Monetary Fund remains at loggerheads with the leftist government over labour market reforms.
Athens is scrambling to strike a deal with its creditors that will release a €7.2bn (£5.3bn) bail-out tranche and prevent the country from defaulting on its debts.
While there were indications that Greece was more willing to compromise in the latest round of negotiations, which are will resume on Monday, officials remain sceptical that an agreement will be reached before May 6, when the European Central Bank will discuss emergency liquidity for Greek banks.
Reports claimed the government was prepared to reduce at least three different VAT rates to one, and limit exemptions. Prime minister Alexis Tsipras had opposed the move, claiming that the change would hit poorer people.
The country will also press-on with privatisations it had also previously vowed to block, according to reports.
However, Syriza has said that demands by creditors to reverse an increase in the minimum wage and cut pensions remain “red lines” that the leftist leadership is unwilling to cross.
“There is progress, but also many open questions,” a source representing the institutions of the European Commission, the European Central Bank and the IMF told the DPA news agency in Germany. “On some questions, there is considerably more willingness to compromise [from Greece] but we cannot say how much longer we will need.”