Greece’s economy has grown slowly in recent years and is still 25% smaller than when the crisis began.
The EU’s Commissioner on Economic and Financial Affairs, Pierre Moscovici, said: “From today, Greece will be treated like any other Europe area country.”
Greece’s reforms had, Pierre Moscovici said, “laid the foundation for a sustainable recovery” but he also cautioned that its recovery was “not an event, it is a process”.
According to the International Monetary Fund (IMF), only four countries have shrunk economically more than Greece in the past decade: Yemen, Libya, Venezuela and Equatorial Guinea.
Eurozone ministers have agreed to unlock the latest tranche of Greece’s bailout cash.
The bailout fund will disburse 8.5 billion euros to Greece, they said in a statement.
The latest tranche of the international bailout will help avert a fresh debt crisis in July when the next €7 billion euro repayment of loans becomes due.
The payment is still subject to parliamentary approvals in some countries.
IMF Director Christine Lagarde said she would propose an approval in principle to her executive board.
The International Monetary Fund wants clarity on longer-term debt relief for Greece once the current funding scheme, worth up to 86 billion euros, runs out next year.
Christine Lagarde said the IMF was ready to participate to the third bailout program for Greece after the meeting of eurozone finance ministers in Luxembourg which capped months of negotiations.
However, the IMF could join the program with a financial support “in the range of $2 billion” only after a full deal on additional measures of debt relief for Greece, she said.
Time was beginning to press for this payment. Greece has repayments on other loans due next month, which it could not otherwise have made.
The decision reflects economic policy actions already taken by Greece and the new commitment by the IMF’s managing director Christine Lagarde to recommend that her board contribute financially to this bailout.
An IMF contribution was politically important for Germany, especially to strengthen the perceived credibility of the bailout.
In a major breakthrough deal, eurozone finance ministers have agreed to extend further bailout loans to Greece as well as debt relief.
After Brussels talks, the ministers agreed to unlock 10.3 billion euros ($11.5 billion) in new loans.
The move came two days after the Greek parliament approved another round of spending cuts and tax increases demanded by international creditors.
The 19 eurozone ministers – known as the Eurogroup also said debt relief would be eventually offered to Greece.
This had been a key demand from the IMF, which says public debt is unsustainable at current levels of about 180% of Greece’s gross domestic product.
The deal was announced after 11 hours of talks between the Eurogroup ministers.
Eurogroup President Jeroen Dijsselbloem told reporters on May 25: “We achieved a major breakthrough on Greece which enables us to enter a new phase in the Greek financial assistance program.”
Jeroen Dijsselbloem said a package of debt measures would be “phased in progressively”, adding that he was “glad to confirm” the IMF would now stay on board.
Poul M. Thomsen, director of the IMF’s European Department, welcomed the recognition that Greek debt was unsustainable and relief was needed.
He warned, however, that the IMF board in Washington still had to agree to the fund’s participation. He also said that the extent of debt relief was still not clear.
The IMF and the Eurogroup have been at odds for months over the issue of reducing Greece’s debt.
Greece’s parliament passed new budget cuts and tax rises at the weekend, in order to unblock much-needed aid to help meet the country’s debt repayments over the coming months.
The bill also created a state privatization fund requested by eurozone finance ministers.
Opponents of the measures demonstrated outside parliament on May 22.
The Greek government, led by the leftist Syriza coalition, agreed to a third bailout worth €86 billion ($96 billion) in 2015.
Greek unions are staging their first general strike against austerity since Alexis Tsipras’s left-wing Syriza government came to power in January.
As protesters gathered in Athens, public services were hit and some transport services ground to a halt.
The main unions appealed for members to walk out against the terms of Greece’s third eurozone bailout.
Greece’s government agreed to push through tax rises and spending cuts in return for €86 billion ($100 billion) in rescue loans.
Greek lawmakers have already voted to raise the retirement age and get rid of most early retirement benefits, and reduced rates of sales tax on some of the big Greek islands have been scrapped.
However, the main civil servants’ union ADEDY and the GSEE private sector union objected to proposals to scale back supplementary pensions and merge pension funds. They were joined by communist-affiliated union PAME.
Public transportation services were shut down, schools were closed and hospitals had only emergency staff levels. Buses and trolley buses were providing limited services.
Photo AFP/Getty Images
Museums and archaeological sites were also shut and news bulletins, newspapers and websites were disrupted because journalists had walked out.
Although general strikes became regular events in Greece in the years following its first eurozone bailout in 2010, this was the first called since Syriza came to power.
After reluctantly agreeing to Greece’s third international bailout in five years in August, Alexis Tsipras called an election and was returned to power in September with 35% of the vote.
Despite agreeing to a series of reforms, Greek officials are currently locked in a dispute with eurozone officials over bad home loans.
The government is trying to avoid indebted Greeks losing their homes, but creditors want an agreement on a mechanism for tackling non-performing home-loans before they unlock €10 billion to recapitalize Greek banks. A separate €2 billion bailout installment is also at stake.
There was some good news for the Greek economy on November 11 when officials announced that unemployment had fallen to 24.9% in August, the lowest level since June 2012.
The eurozone inflation returned to zero in October 2015 from (-0.1%) in the previous month.
According to Eurostat estimates, price growth in food, alcohol and tobacco increased slightly, while energy prices were still considerably lower than last year.
The EU statistics agency also estimated the unemployment rate in the 19 countries that use the euro was 10.8% in September, down from 10.9% in August.
The rate for the 28 EU members was 9.3%, down from 9.4% the month before.
The eurozone rate is the lowest since January 2012 while the rate for the whole EU is the lowest since September 2009.
Greece had the highest rate at 21.6%. The country is expected to be higher but has yet to report September figures, while Germany had the lowest at 4.5%.
The inflation figures are an early, flash estimate from Eurostat and so are not broken down by member state.
It does give broad indications of which groups of products have gone up or down.
Food, alcohol and tobacco prices were estimated to be rising 1.5% in October, compared with 1.4% in September.
Energy prices were falling an annual 8.7%, compared with 8.9% a month earlier.
Services prices were up 1.3% compared with 1.2% the month before.
European Central Bank President Mario Draghi suggested this month that he might be prepared to extend the bank’s program of quantitative easing given the low levels of eurozone inflation.
Eurogroup has agreed a third bailout deal for Greece after the Greek parliament backed the plan.
European Commission President Jean-Claude Juncker said the deal sent a message “loud and clear” – Greece will stay in the eurozone.
The agreement demands tax rises and more tough spending cuts in return for Greece’s third bailout in five years.
The deal means new loans of up to €86 billion ($95 billion) will be made available over the next three years.
It comes at a heavy political price for Greek PM Alexis Tsipras, who has faced a rebellion in his left-wing Syriza party.
More than 40 Syriza MPs voted against him when parliament decided on the bailout agreement on Friday, after all-night talks.
Reports in Greece suggest he will seek a vote of confidence in parliament next week, bringing the prospect of snap elections closer.
Announcing the “comprehensive and ambitious reform package”, Eurogroup chairman Jeroen Dijsselbloem said: “All the intense work of the past week has paid off.
“If implemented with determination, the deal will allow the Greek economy to return to growth.”
He added: “Of course there were differences, but we have managed to solve the last issues.”
Jean-Claude Juncker said: “The past six months have been difficult. They have tested the patience of policy-makers and they have tested the patience of our citizens even more.
“Together, we have looked into the abyss. But today, I am glad to say that all sides have respected their commitments.”
He added: “The message of today’s Eurogroup is loud and clear: on this basis, Greece is and will irreversibly remain a member of the euro area.”
Before the first tranche of around €26 billion can be disbursed around August 20 there will have to be a series of votes in national parliaments across Europe.
Greece must repay about €3.2 billion to the European Central Bank (ECB) on August 20.
Eurogroup finance ministers also confirmed that the thorny issue of writing off some of the Greece’s debts would be considered in the autumn.
This has been a crucial demand of both Alexis Tspiras and the IMF, which says it will only contribute if there is some form of debt relief.
Greece has cleared overdue debt repayments of €2.05 billion to the IMF and is no longer in arrears, the creditor has confirmed.
The repayments, and another for €4.2 billion to the European Central Bank (ECB) due on Monday, came after the EU made Greece a short-term loan of €7 billion.
Greece missed one repayment to the IMF in June and another earlier this month.
Earlier on Monday, Greek banks reopened after being closed for three weeks.
However, many restrictions remain and Greeks are facing price rises with an increase in VAT.
IMF spokesman Gerry Rice confirmed in a statement that Greece had repaid the totality of its arrears.
“As we have said, the fund stands ready to continue assisting Greece in its efforts to return to financial stability and growth,” he said.
Greece missed its first repayment to the IMF on June 30 and another on July 13 during deadlock over negotiations for a third bailout.
The crisis brought Greece to the brink of economic collapse and an exit from the euro.
The Greek government has since reached a cash-for-reforms deal with its creditors and negotiations are due to begin on the proposed €86 billion rescue package.
For the past three weeks, Greeks have been waiting in line at cash machines to withdraw a maximum of €60 a day, a restriction imposed amid fear of a run on the banks.
From July 20, the daily limit becomes a weekly one capped at €420, meaning Greeks will not have to queue every day.
However, a block on transfers to foreign banks and a ban on cashing cheques remain in place.
VAT is rising from 13% to 23% meaning Greeks will pay more on a range of goods and services, including taxis and restaurants.
The rise was among a package of reforms demanded by Greece’s creditors.
PM Alexis Tsipras faced a rebellion from within his left-wing Syriza party over the tough austerity measures being demanded by other eurozone leaders, who are among Greece’s creditors.
He has since replaced his rebel ministers but analysts say his government has been weakened and fresh elections may be held in September or October.
The Greek parliament is due to hold a second vote on July 22 on measures including justice and banking reforms. The government is again likely to scrape through, supported by opposition parties.
Representatives from Greece’s creditors – known as the Troika – are due to arrive in the country soon and talks on the new bailout are expected to last about a month.
The eurozone is currently managed by the Eurogroup, made up of the finance ministers of each nation.
The International Monetary Fund (IMF) has attacked the EU over the terms of a bailout offered to Greece.
The IMF said Greece’s public debt was now “highly unsustainable” and urged debt relief on a scale “well beyond what has been under consideration to date”.
On July 14, the IMF made public advice it had given to the Eurogroup of finance ministers at the weekend.
That advice included proposals that would see some of Greece’s enormous debt written off.
The IMF study said EU countries would have to give Greece 30-years to repay all its European debt, including new loans, and a dramatic extension on the maturity of its debts. Without such extensions creditors might have to accept “deep upfront haircuts” on existing loans, the IMF added.
The split between the IMF and Greece’s European creditors over how best to deal with the country’s debt crisis has been hinted at before, but this is the first time such a disagreement has been made public.
One senior IMF official said the fund would only participate in a third bailout for Greece if EU creditors produce “a clear plan”.
The current deal “is by no means a comprehensive, detailed agreement”, the official said.
Under the new bailout terms, eurozone governments will contribute between €40 billion and €50 billion to Greece’s new three-year bailout, the IMF is expected to contribute another major chunk and the rest will come from selling off state assets and the financial markets.
The split between the IMF and the EU comes just hours before the Greek parliament is due to vote on a raft of economic reforms demanded of the Eurogroup over the weekend as a condition of a third Greek bailout.
The measures – which face resistance from PM Alexis Tsipras’ own lawmakers – include taxation increases and pension curbs.
Greece owes about 10% of its debt to the IMF.
It has missed two deadlines for repayment to the fund and is the first EU country ever to do so.
The IMF also said it regarded forecast rates of growth for Greece as unrealistically high.
Its analysis, released on July 14, pointed to Greek government debt reaching a peak of close to 200% of GDP or national income – over the next two years, which it called “highly unsustainable”.
On July 14, Alexis Tsipras said in an interview on state television that he did not believe in the bailout offered but was willing to implement it to “avoid disaster for the country” and the collapse of the banks.
The conditional agreement to receive up to €86 billion ($95 billion) from the EU over three years depends on further economic reforms – including the labor markets, banks and privatization – being passed after July 15.
Hard-liners in Alexis Tsipras’ own Syriza party are likely to rebel and the junior coalition party, the Independent Greeks, have offered only limited support for the reforms
Meanwhile, unions and trade associations representing those including civil servants, municipal workers and pharmacy owners have called or extended strikes to coincide with Wednesday’s parliamentary votes.
Greece also faces an immediate cash crisis. Banks have been shut since June 29.
Alexis Tsipras warned banks are unlikely to reopen until the bailout deal is ratified, and this could take another month.
A suggestion of providing Greece with emergency funding under the EU-wide European Financial Stability Mechanism has been opposed by Britain, which is not part of the euro but is an EU member.
Greece will receive a third bailout after marathon talks in Brussels where eurozone leaders have reached the agreement.
EU chairman Donald Tusk has announced leaders agreed “in principle” on negotiations for the bailout, “which in other words means continued support for Greece”.
Greece’s PM Alexis Tsipras said that after a “tough battle”, his country had secured a “growth package” of €35 billion, and won debt restructuring.
The country will now have to pass reforms demanded by the eurozone by July 15.
“There will not be a <<Grexit>>,” said European Commission head Jean-Claude Juncker, referring to the widespread fear that if there had been no deal, Greece would have had to leave the eurozone.
Alexis Tsipras also said he had the “belief and the hope that… the possibility of <<Grexit>> is in the past”.
Photo EPA
“The deal is difficult but we averted the pursuit to move state assets abroad,” he said.
“We averted the plan for a financial strangulation and for the collapse of the banking system.”
Jeroen Dijsselbloem, the head of the eurozone group of finance ministers, said the agreement included a €50 billion Greece-based fund that will privatize or manage Greek assets. Out of that €50 billion, €25 billion would be used to recapitalize Greek banks, he said.
Greek banks have been closed for two weeks, with withdrawals at cash machines limited to €60 per day. The economy has been put under increasing strain, with some businesses closing and other struggling to pay suppliers.
Eurozone finance ministers are due to meet later on Monday to discuss providing “bridge financing” that would cover Greece’s short-term needs.
Parliaments in several eurozone states have to approve any new bailout.
“The road will be long, and judging by the negotiations tonight, difficult,” German Chancellor Angela Merkel said on July 13.
French President Francois Hollande said the agreement had allowed Europe to “preserve integrity and solidarity”.
“We also had to show that Europe is capable of solving a crisis that has menaced the eurozone for several years,” he said.
Eurozone leaders had been meeting in Brussels for 17 hours, with talks continuing through the night.
During the talks, reports emerged that Greece was holding out over the proposed role of the International Monetary Fund (IMF) in a new program, and over the fund to hold Greek assets.
Eurogroup is due to resume talks in Brussels on a bailout deal for Greece.
Nine hours of talks on July 11 ended without agreement and Eurogroup leader Jeroen Dijsselbloem described negotiations as “very difficult”.
Eurozone finance ministers have expressed skepticism Greece will implement the austerity measures it has proposed.
They have little time to produce a working plan ready for European leaders who meet in Brussels later on Sunday.
“We have had an in-depth discussion of the Greek proposals, the issue of credibility and trust was discussed and also of course financial issues involved, but we haven’t concluded our discussions,” Jeroen Dijsselbloem, who heads the Eurogroup of finance ministers, told reporters as the earlier round of talks broke up.
“It is still very difficult but work is in progress.”
Talks are due to resume at 09:00 GMT.
Greek lawmakers have backed the latest measures proposed by PM Alexis Tsipras, despite the fact that many of the ideas were rejected by the Greek people in July 5 referendum.
Greek Finance Minister Euclid Tsakalotos is attending the talks in Brussels, trying to convince his counterparts that his government can be trusted to push through their economic reform plan.
Before talks began on July 11, Jeroen Dijsselbloem said there were concerns not just about “the content of the proposals, but also on the even more difficult issue of trust”.
“How can we really expect this government to implement what it’s now promising? I think it’s going to be quite a difficult meeting,” he said.
German Finance Minister Wolfgang Schaeuble said Greece would have to do more than promise reforms if it wanted more money.
“We will definitely not be able to rely on promises,” he said.
Reports on July 11 suggested that German ministers were drawing up a plan that would allow Greece to exit the eurozone temporarily if this weekend’s talks fail – something Athens says it is not aware of.
There were also unconfirmed reports that Finland had refused to agree to the new bailout proposals, although on its own it is unlikely to stop any deal going ahead.
Greece is asking creditors for €53.5 billion ($59.47 billion) to cover its debts until 2018.
However, the amount of the new bailout could reach €74 billion as Greece seeks a restructuring of its massive debt, which it says is unsustainable.
Of the €74 billion, €58 billion could come from the EU’s bailout fund, the European Stability Mechanism, with €16 billion from the IMF, sources have said.
As talks drag on, Greece’s financial situation is close to collapse.
Banks have been closed for two weeks and a €60 ($66) daily limit on cash machine withdrawals, imposed on June 28, remains in force for Greek citizens.
Rival rallies have been held in the Greek capital ahead of a crucial debt referendum on July 5.
PM Alexis Tsipras was greeted with huge cheers by tens of thousands of Greeks when he told supporters to vote “No” to the terms of an international bailout.
Those attending another huge rally nearby warned a “No” vote would see Greece ejected from the eurozone.
A Greek court earlier rejected a challenge to the legality of the referendum and it will go ahead.
Greece’s current bailout program ran out on June 30. All week banks have been shut, with limits imposed on cash withdrawals.
Another war of words flared late on July 3 when Finance Minister Yanis Varoufakis dismissed a Financial Times report that Greece was preparing contingency plans for a possible “bail-in” of bank deposits as a “malicious rumor”. The report quoted sources as saying banks were considering a “haircut” of 30% on deposits over €8,000.
Opinion polls on July 3 suggested Greece was evenly split over the vote – an Ipsos survey putting “Yes” supporters at 44% and “No” at 43%.
Opinion polls within 24 hours of the voting are banned, as are more campaign rallies.
Estimates of the crowds gathered in Athens on July 3 ranged from 25,000 to 50,000, with police and observers agreeing that the crowds at the “No” rally were bigger.
Rallies for both camps were held in 10 other Greek cities.
In his speech, Alexis Tsipras reiterated the themes of almost daily addresses over the past week – the need for Greece to preserve its dignity and “say a proud <<No>> to [European] ultimatums” to sign up to fresh austerity.
The prime minister said: “This is not a protest. It is a celebration to overcome fear and blackmail.”
Alexis Tsipras urged Greeks to “decide to live in dignity in Europe”.
He denied a “Yes” vote would mean leaving Europe, saying: “We are not going to allow them to destroy Europe.”
Only a few hundred meters away, supporters of a “Yes” vote said they believed Alexis Tsipras could not deliver on such a promise.
Athens Mayor George Kaminis told supporters at the rally that people did not even understand the question on the ballot paper.
He said: “We have been dragged into a pointless referendum that is dividing the people and hurting the country.”
Claims by Greek politicians that a “No” vote will strengthen their hand in bailout negotiations have been rebuffed by European leaders.
Both EU Commission President Jean-Claude Juncker and Jeroen Dijsselbloem – head of the Eurogroup of finance ministers – have insisted a “No” vote will weaken the Greeks’ position and that even a “Yes” vote will not mean a deal is easy to agree.
Several European officials have complained in strong terms about Greece’s abrupt decision to hold a referendum on the terms of a bailout offer they say is no longer on the table.
Greece has requested a new bailout deal from the eurozone, just hours before it must repay €1.6 billion to the International Monetary Fund (IMF).
The Greek government is asking for a new two-year €29.1 billion aid deal from a bailout mechanism for eurozone countries.
Eurozone finance ministers discussed the Greek offer in a teleconference on Tuesday evening, but made no decision.
If it fails to make the IMF payment, Greece could risk leaving the euro.
The European Commission, which is one of Greece’s creditors, wants Athens to raise taxes and cut welfare spending.
No advanced economy has ever missed a payment on an IMF loan.
Photo AP
Amid fears of a Greek default on its huge public debt of €323 billion – and a possible exit from the euro – long queues of people are continuing to snake from many cash machines in Greece, where withdrawals are capped at just €60 a day.
On Tuesday evening, thousands of pro-EU protesters braved stormy weather and gathered outside the Greek parliament in Athens to urge a “Yes” vote in a referendum on July 5 over whether the country should accept its creditors’ proposals.
It follows a similar demonstration by those advocating a “No” vote – the path preferred by PM Alexis Tsipras – on June 29.
Greek banks did not open this week after talks between Greece and its creditors broke down.
However, up to 1,000 bank branches will re-open from July 1 to allow pensioners – many of whom do not use bank cards – to withdraw up to €120.
The European Commission offered a slightly amended deal to Greece late on Monday night, which the Greek government did not accept.
Instead, Greece responded with a request for a two-year deal under the European Stability Mechanism (ESM), the bailout mechanism for eurozone countries whose aim is to maintain the stability of the euro. The ESM did not exist when Greece was bailed out in 2010 and 2012.
However, German Chancellor Angela Merkel has insisted that the eurozone’s wealthiest member will not enter into new aid negotiations with Greece before its weekend referendum.
“Before a referendum, as planned, is carried out, we won’t negotiate on anything new at all,” Angela Merkel said.
The ECB is believed to have disbursed virtually all of its emergency funds for Greece, amounting to €89 billion.
EU leaders have warned Greek people that rejecting international creditors’ proposals in the bailout referendum called for Sunday, July 5, would mean leaving the euro.
German Vice Chancellor Sigmar Gabriel said the vote would be “Yes or No to the eurozone”.
Greece’s PM Alexis Tsipras has urged a “No” vote but insists he wants Greece to stay in the euro.
Talks between Greece and its creditors broke down last week, leading to Greek banks having to shut this week.
Global stock markets saw big falls on Monday, June 29, after the weekend’s events.
As well as Sigmar Gabriel, the leaders of the eurozone’s other two largest economies said Greek voters would effectively be deciding whether or not they wanted to stay in the eurozone on July 5.
Italian PM Matteo Renzi said the choice would be between the euro and the drachma, while French President Francois Hollande said: “What’s at stake is… knowing whether the Greeks want to stay within the eurozone.”
Speaking to Greek television on June 29, Alexis Tsipras urged as many Greeks to vote “No” as possible on July 5 to give the Greek government a stronger position to restart negotiations.
He said his government had a mandate “to be within the European framework but with more justice”.
“They will not kick us out of the eurozone because the cost is immense,” he said.
Earlier, European Commission President Jean-Claude Juncker said he felt “betrayed” by the “egotism” shown by Greece in the failed talks on giving heavily indebted Greece the last payment of its international bailout.
Jean-Claude Juncker said Greek proposals were “delayed” or “deliberately altered” but added the door was still open to talks.
Despite the public war of words, a Greek official said Alexis Tsipras had spoken to Jean-Claude Juncker on June 26 and asked him to extend Greece’s bailout until the referendum.
A critical deadline looms on June 30, when Greece is due to pay back €1.6 billion to the IMF – the same day its current bailout expires. There are fears of a default and a possible exit from euro.
Jean-Claude Juncker said that he still believed a Greek exit from the euro was not an option and insisted that the creditors’ latest proposal meant more social fairness.
The question which will be put to voters on July 5 will not be as simple as whether they want to stay in the euro or not – instead it asks Greeks to approve or reject the specific terms laid out by Greece’s creditors:
“Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled <<Reforms for the completion of the Current Program and Beyond>> and the second <<Preliminary Debt Sustainability Analysis>>.
The Greek lawmakers have backed plans for a referendum on international creditors’ terms for a new bailout.
The July 5 referendum was called by Prime Minister Alexis Tsipras, who opposes further budget cuts. He urged voters to deliver a “resounding <<No>>” to the package.
Eurozone partners have criticized Greece’s referendum announcement, and rejected its request to extend the bailout program beyond June 30.
Greece could default on a €1.6 billion repayment to the International Monetary Fund (IMF) due on that day.
There are fears the country may leave the euro and that its economy may collapse without new bailout funds.
Alexis Tsipras’ motion on a referendum easily won backing in the 300-member strong parliament, with at least 179 lawmakers voting in favor of it in the early hours of Sunday, June 28.
Speaking just before the vote, Alexis Tsipras described the creditors’ proposal as “an insulting ultimatum” and said an emphatic “No” vote on July 5 would strengthen Greece’s negotiating position.
His government had earlier rejected the creditors’ offer of a five-month extension to Greece’s bailout program in exchange for reforms.
On June 28, eurozone finance ministers rejected the Greek proposal for the bailout extension beyond Tuesday’s deadline. A Eurogroup statement said Greece had broken off negotiations over a new bailout deal “unilaterally”.
Eurogroup head Jeroen Dijsselbloem said it would now be up to the European Central Bank (ECB) to decide whether to continue providing emergency liquidity funding to the Greek banking system.
Meanwhile, queues have formed in Greece outside banks in the past few days amid concerns that the central bank might start restricting withdrawals.
Greece PM Alexis Tsipras has criticized the country’s international creditors for failing to accept his government’s latest reform proposals.
Alexis Tsipras said this never occurred with similar measures put forward by other states negotiating bailouts, suggesting creditors might not want a deal.
There are also reports that Greece has rejected an IMF counter-proposal seeking more pension and spending cuts.
Alexis Tsipras’ remarks came before he began new talks to secure a debt deal.
Greece must repay €1.6 billion to the International Monetary Fund (IMF) by the end of the month, or face default and possible exit from the EU.
Eurozone finance ministers are due to finalize a deal on June 24 by the end of the day.
On June 24, the ECB again increased additional emergency funding for Greek banks to stave off fears of a bank run – the fifth time in eight days it has done so as fearful savers withdraw up to €1bn a day from domestic banks.
Photo AP
Only once agreement is reached will creditors unlock the final €7.2 billion tranche of bailout funds.
The agreement being formed is believed to include:
New taxes on businesses and the wealthy
Selective increases in VAT
Savings in pensions linked to curbing early retirement and increasing pension contributions
No further reductions in pensions or public-sector wages – “red lines” for Greece’s Syriza government
PM Alexis Tsipras has been meeting the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF) – the trio evaluating his proposals.
They are hoping to finalize a deal that would release further loans to Greece before it runs out of money.
Reuters news agency quoted a eurozone official as saying that, despite several hours of talks, there had been no breakthrough so far and the sides were “still stuck at the same red lines”.
A meeting of European finance ministers in Luxembourg ended with no agreement on Greece’s debt.
The head of the Eurogroup, Jeroen Dijsselbloem, has said that Greece needs to seize a “last opportunity” to reach a deal with its creditors.
Jeroen Dijsselbloem called on Greece to submit “credible” proposals in the coming days.
To help tackle the crisis, an emergency summit of leaders from Eurozone nations has been called for June 22.
Jeroen Dijsselbloem highlighted that “very little time remains” as Greece’s current bailout program runs out this month.
“It is still possible to find an agreement and extend the current program before the end of the month, but the ball is clearly in the Greek court to seize that last opportunity,” he said.
The Greek finance minister, Yanis Varoufakis, said his nation had presented a “comprehensive” proposal and that disagreement only existed over spending equivalent to 0.5% of Greek GDP, which he says does not constitute a “dangerous impasse”.
Yanis Varoufakis highlighted that Greece has already made a “gigantic adjustment” over the last five years and rejected any measures that would “jack-up” taxes and reduce benefits further.
He warned that negotiations were “dangerously close to a state of mind that accepts an accident”.
Greece has less than two weeks remaining to strike a deal with its creditors or face defaulting on an existing €1.6 billion loan repayment due to the IMF.
The country has already rolled a €300 million payment into those due on June 30.
If it fails to make the payment, Greece risks has to leave the eurozone and possibly also the EU.
The European Commission, the IMF and the European Central Bank (ECB) are unwilling to unlock bailout funds until Greece agrees to reforms.
They want Greece to implement a series of economic changes in areas such as pensions, VAT and on the budget surplus before releasing €7.2 billion of funds, which have been delayed since February.
Pressure was also raised on Greece today when the boss of the International Money Fund (IMF), Christine Lagarde, warned there was “no period of grace” for Greece over its impending debt repayment deadline.
Christine Lagarde said Greece would be in default on its loans from the IMF if it failed to make a €1.6 billion ($1.8 billion) payment on June 30.
The Bank of Greece has warned for the first time that the country could be on a “painful course” to default and exit from both the eurozone and the EU.
The central bank’s warning comes as the government and its international creditors blamed each other for failing to reach a deal over economic reforms.
That failure is holding up the release of €7.2 billion in bailout funds.
About €30 billion was withdrawn from Greek bank deposits between October and April, the central bank added.
The central bank also warned Greece’s economic slowdown would accelerate without a deal.
“Failure to reach an agreement would… mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and, most likely, from the European Union,” the Bank of Greece said in a report.
“Striking an agreement with our partners is a historical imperative that we cannot afford to ignore.”
Finance Minister Yanis Varoufakis, when asked if there could be an agreement at the meeting of euro zone finance ministers in Luxembourg on June 18, said: “I do not believe so.”
He said preparatory work for the meeting had not gone far enough for a deal.
Greek shares fell sharply again. The Athens General Index closed 3.2% lower which takes its loss for the past four trading sessions to almost 19%.
Austrian Chancellor Werner Faymann was in Athens on June 17 in a last-ditch bid to end the standoff.
“For Europe to be stronger, it must show solidarity and support to any country which needs it,” Werner Faymann said during a meeting with Greek President Prokopis Pavlopoulos.
That came ahead of a meeting of euro zone finance ministers on June 18 although officials have played down expectations of a make-or-break decision being reached.
The Austrian chancellor’s comments followed a harsher critique from European Commission President Jean-Claude Juncker, who on June 16 accused the Greek government of misleading voters, as Greek PM Alexis Tsipras accused the EU and International Monetary Fund (IMF) of trying to “humiliate” his country.
Greece has two weeks remaining to strike a deal with its creditors or face defaulting on an existing €1.6 billion loan repayment due to the IMF.
The country has already rolled a €300 million payment into those due on June 30.
Jean-Claude Juncker said the Greek government had not told the truth about its latest reform proposals.
“I am blaming the Greeks [for telling] things to the Greek public which are not consistent with what I’ve told the Greek prime minister,” he said.
PM Alexis Tsipras has said that the lenders wanted to raise VAT on electricity.
Other Greek ministers have criticized suggestions to increase sales tax on medicines.
Jean-Claude Juncker said: “I’m not in favor, and the prime minister knows that… of increasing VAT on medicaments and electricity. This would be a major mistake.”
“The debate in Greece and outside Greece would be easier if the Greek government would tell exactly what the Commission… are really proposing,” he added.
YanisVaroufakis claimed that EU proposals did include VAT increases: “Juncker either hadn’t read the document he gave Tsipras – or he read it and forgot about it.”
Elsewhere in the eurozone, Portugal’s short-term borrowing costs rose sharply on June 17, with yields on six-month treasury bills jumping from minus 0.002% to 0.044% at the country’s latest debt auction.
The rise came despite an assurance to investors from Portuguese PM Pedro Passos Coelho that his country would not be “the next to fall” in the event of a Greek default.
Greece has announced it will delay June 5 €300 million ($330 million) debt repayment to the International Monetary Fund.
The country told the IMF it will bundle all four of its June payments together.
The Greek government will have until June 30 to pay the €1.5 billion total, which is also the day on which its bailout deal with the EU and IMF runs out.
PM Alexis Tsipras is trying to reach a deal to unlock final bailout funds before Greece runs out of money.
But Greece’s creditors say differences remain between the two sides.
IMF spokesman Gerry Rice said that under a precedent dating back to the late 1970s, governments could ask to bundle together “multiple principal payments falling due in a calendar month… to address the administrative difficulty of making multiple payments in a short period.”
The last country to bundle together payments to the IMF was Zambia in the mid-1980s.
Alexis Tsipras said after talks in Brussels on June 4 that an agreement with Greece’s international creditors was “in sight”.
However, the head of the eurozone’s finance ministers Jeroen Dijsselbloem, who was involved in the negotiations, said later the gap was “still quite large”.
High-level talks were expected to resume on June 5, although Alexis Tsipras was due to brief the Greek parliament rather than return to Brussels.
Alexis Tsipras rejected elements of proposals put forward by his country’s international creditors in talks with Jeroen Dijsselbloem and European Commission chief Jean-Claude Juncker.
He said the sides were now “very close to an agreement” on the key sticking point of primary surpluses – the amount by which tax revenues exceed public spending.
Alexis Tsipras also said there were “points that no-one would consider as a base for discussion”, citing cuts to pensions and a raise in sales tax for electricity.
Jeroen Dijsselbloem said the talks had been successful in narrowing down the remaining issues, although key differences still remained.
He expected Greece to “look at our proposals more carefully, probably come up with some alternative proposals that they want,” Reuters quoted him as saying.
Greece’s cash-strapped government has been haggling since February over the release of the last €7.2 billion in funds, but its current bailout arrangement with the IMF, European Central Bank (ECB) and European Commission runs out at the end of June.
Failure to reach a deal could trigger a Greek default and a potential exit from the eurozone.
Greece is hopeful that Eurozone ministers will recognize the fiscal progress it has made.
Eurozone finance ministers are meeting in Brussels on May 11 to continue negotiations on a deal to release a portion of billions of bailout funds.
Greek ministers say they will honor a payment of €750 million ($834 million) to the IMF due on May 12.
No breakthrough is expected at today’s talks, with many issues unresolved.
Greece’s left-wing government has said it will not break anti-austerity electoral promises, something that has put the country at odds with European creditors.
The country has until June to agree a new reform deal with its creditors.
PM Alexis Tsipras is reported to have told his cabinet that Europe needs to acknowledge the economic reforms that Greece has made.
Eurozone ministers are not hopeful of a deal being struck.
“We have made progress, but we are not very close to an agreement,” Eurogroup chair Jeroen Dijsselbloem told the Italian newspaper Corriere della Sera.
“It will surely not be reached at the Eurogroup meeting on Monday,” he said.
Greece did meet May 6 deadline to pay €200 million in interest to the IMF.
The Greek government has dismissed media reports that the country is preparing to default on its loans if it cannot reach agreement on its bailout terms with international creditors.
A government spokesman said negotiations were proceeding swiftly towards a solution.
Greece negotiated a three-month extension to its €240 billion ($272 billion) bailout at the end of February.
The Greek government is due to pay the IMF €203 million on May 1st and €770 million on May 12th.
Photo Reuters
However, reports suggest the government is rapidly running out of money. It needs to find €2.4bn to pay civil service salaries and pensions this month.
The Greek government has also denied reports that it was considering calling early elections if it failed to negotiate a settlement with its international creditors.
Last week, eurozone officials said Greece only had six working days left to come up with a revised list of reforms to seal a deal on its next rescue bailout.
Eurozone deputy finance ministers want an agreement on the €7.2 billion loan in time for a Eurogroup meeting on April 24th.
PM Alexis Tsipras has said that Athens will not be able to service its debt without financial help from the European Union.
Cyprus government has decided to lift the last remaining capital controls it imposed on the country’s banking system during the financial crisis of 2013.
Cyprus was the only crisis-hit eurozone country to restrict capital transfers, as it faced a run on the banks.
The controls were eased in January.
There will no longer be a monthly cap of €20,000 ($22,000) on transfers by individuals to foreign banks, or of €10,000 for travelers moving money out of the country.
Cyprus received a €10 billionn bailout from the EU and International Monetary Fund (IMF) after its biggest banks nearly collapsed in March 2013 because of huge losses on their Greek investments.
The island’s second-biggest lender, Cyprus Popular Bank (also known as Laiki Bank), was wound up and deposits worth more than €100,000 in the largest bank, Bank of Cyprus, were seized.
Those measures were part of the deal to ensure that Cyprus funded part of the €10 billion bailout.
Speaking on April 3, Cyprus President Nicos Anastasiades voiced confidence that the country was recovering well, despite three years of recession
Lifting capital controls, Nicos Anastasiades said, was “a vote of confidence in our banking system which, now fully independent of Greek banking institutions, can move forward”.
The Greek debt crisis had a severe impact on Cypriot banks, which lost about €4.5 billion worth of Greek sovereign bonds – equivalent to 25% of Cypriot gross domestic product, Reuters news agency reports.
Greece and the eurozone finance ministers have reached a deal to extend its bailout by four months after talks in Brussels.
The extension will allow Greece to negotiate a follow-up arrangement with creditors.
“The Greek authorities have expressed their strong commitment to a broader and deeper structural reform process aimed at durably improving growth and employment prospects, ensuring stability and resilience of the financial sector and enhancing social fairness,” the Eurogroup said in a statement.
Dutch finance minister Jeroen Dijsselbloem, head of the Eurogroup, said that Athens had pledged to honor all its debts.
“This is a very positive outcome,” Jeroen Dijsselbloem told a news conference on Friday night.
“I think tonight was a first step in this process of rebuilding trust. As you know trust leaves quicker than it comes. Tonight was a very important, I think, step in that process,” he added.
Greece had agreed to present an initial list of reform measures by February 23, Jeroen Dijsselbloem said.
Athens welcomed the deal, which a Greek government official said gave it time to negotiate a “new deal”.
“Greece has turned a page,” the official said.
“We have avoided recessionary measures.”
Greece had been seeking a six-month extension of the bailout but the Eurogroup opted for four months.
The euro gained against the US dollar on February 20 following the announcement, adding 0.3% to $1.1403, while the Dow Jones industrial average and S&P 500 struck new intraday highs.
The agreement removes the immediate risk of Greece running out of money next month.
The new deal also provides a breathing space for the new Greek government to try to negotiate longer-term debt relief with its EU creditors.
Greece has submitted a loan extension request to the eurozone on February 19 after weeks of wrangling over its international bailout.
The country is seeking a six-month assistance package, rather than a renewal of the existing deal which comes with tough austerity conditions.
Details of the request have not been made public, but any deal is likely to differ from the current bailout conditions set by the eurozone.
Eurozone finance ministers will meet in Brussels on February 20 to discuss the move.
The Greek request includes a pledge to maintain “fiscal balance” for a six-month period, while it negotiates with eurozone partners over long-term growth and debt reduction, Reuters has reported.
The government was also reported as saying that its extension proposal was in order to give Athens enough time, without the threat of “blackmail and time deficits”, to draw up a new agreement with Europe for growth over the next four years.
Greece faces running out of money by the end of the month without a deal.
The loan request follows days of negotiations between eurozone finance ministers and Greek government’s anti-austerity Syriza party.
It will now be reviewed by the eurozone leaders, as well as representatives of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission.
The Greek stock market fell by more than 4% at its open on Tuesday, February 17, after European finance ministers failed to reach a new deal to restructure the country’s debts.
Greek bank shares fell almost 9%, while the government’s borrowing costs rose, with the yield on a 10-year sovereign bond rising 82 basis points to 10.74%.
On Monday night, Greece rejected a plan to extend its €240 billion bailout.
Greek Finance Minister Yanis Varoufakis called the EU deal “absurd” and “unacceptable”.
However, Yanis Varoufakis declared he was ready to do “whatever it takes” to reach agreement over Greece’s bailout, despite the collapse of the talks.
He also said he was prepared to agree a deal under different conditions.
The Greek stock exchange recovered some ground as the day progressed, but at midday on Tuesday in Athens, it was still 2.25% lower.
Stock exchanges across Europe all fell in morning trade before recovering.
Germany’s main index, the Dax, was 0.35% lower and France’s blue chip index, the CAC-40, down 0.19% at mid-day.
In the UK, which has less exposure to Greece’s debt woes, the FTSE 100 Index which also started the day lower, had risen 0.45% by lunchtime.
JP Morgan claimed over the weekend that €2 billion worth of deposits was flowing out of Greek banks each week and estimated that if that were to remain the case, they would run out of cash to use as collateral against new loans within 14 weeks.
The investment bank’s estimate is based on a calculation that a maximum of €108 billion of deposits is left in Greek banks.
The most up-to-date figures from the Greek central bank show deposits dropped 2.4% month-on-month in December to €160.3 billion from €164.3 billion, marking the third monthly fall in a row.
Dutch Finance Minister Jeroen Dijsselbloem, who is also chairing the Eurogroup meetings of eurozone finance ministers, warned on Monday night there were just days left for talks.
Jeroen Dijsselbloem said it was now “up to Greece” to decide if it wanted more funding or not.
Ahead of Tuesday’s meeting, he said: “I hope they [Greece] will ask for an extension to the program, and once they do that, we can allow flexibility, they can put in their political priorities.
“Of course, we will see whether their program remains on track. But that is the way forward. It’s really up to the Greeks. We cannot make them or ask them. It really it really is up to them. We stand ready to work with them, also [over] the next couple of days.”
Greece’s current bailout expires on February 28. Any new agreement would need to be approved by national governments, so time is running out to reach a compromise.
Without a deal, Greece is likely to run out of money.
On Tuesday morning, Luxembourg’s Finance Minister, Pierre Gramegna, called for a greater degree of compromise on both sides.
“We can’t remain in a blockade, so everyone has to move a bit, water down demands, so we can find a compromise. There are flexibilities in the program, we have to make use of them,” he said.
“When the Greeks are against the programme and don’t want to work in this framework, it will be tough.”
Yanis Varoufakis said on Tuesday ministers would “continue to deliberate”, in order to enhance the chances of a deal.
He added he wanted to achieve “a very good outcome for the average European. Not for the average Greek, the average Dutch person or the average German”.
“We know in Europe how to deliberate in such a way as to create an honourable solution out of an initial disagreement,” Yanis Varoufakis said.
Greece has proposed a new bailout program that involves a bridging loan to keep the country going for six months and help it repay €7 billion of maturing bonds.
The second part of the plan would see Greece’s debt refinanced. Part of this might be through “GDP bonds” – bonds carrying an interest rate linked to economic growth.
Greece also wants to see a reduction in the primary surplus target – the surplus the government must generate (excluding interest payments on debt) – from 3% to 1.49% of GDP.
Two opinion polls last week indicated that 79% of Greeks supported the government’s policies, and 74% believed its negotiating strategy would succeed.
The Greek government is to present its first concrete proposals for an alternative debt plan at an emergency meeting of eurozone finance ministers in Brussels.
Greece’s left-wing government wants to overhaul 30% of its bailout obligations, replacing them with a 10-point plan of reforms.
However, EU ministers have warned that Greece must abide by existing terms.
The EU-IMF bailout for the debt-laden country expires on February 28 and Greece does not want it extended.
Instead the new Athens government is asking for a “bridge agreement” that will enable it to stay afloat until it can agree a new four-year reform plan with its EU creditors.
PM Alexis Tsipras’s government won a confidence vote on Tuesday, with the support of 162 deputies in the 300-seat parliament.
The Athens stock exchange then fell by more than 3% ahead of the emergency Eurogroup meeting, during which Greece’s new leaders will unveil their controversial debt proposals.
Greece’s Syriza-led government says the conditions of the €240 billion bailout – sweeping spending cuts and public sector job losses – have impoverished Greece.
It rejects the “troika” team – the EU, International Monetary Fund (IMF) and European Central Bank (ECB) – overseeing the bailout’s implementation.
The government’s proposal for overhauling its bailout comes in four parts, according to a finance ministry source widely quoted in Greek media.
Under the first part, Greece would co-operate on 70% of its bailout conditions but wants to scrap 30% – replacing it with 10 new reforms to be agreed with the Organization for Economic Co-operation and Development (OECD). It is unclear what these would be.
The plan also includes bond swaps to reduce Greece’s debt mountain and a proposal to reduce the primary budget surplus target for this year to 1.49% of GDP, rather than the 3% demanded by its creditors.
A swift deal with the EU is unlikely. Most finance ministers, including Germany’s Wolfgang Schaeuble, are insisting that Greece must not renege on its bailout conditions.
The Eurogroup ministers will report to Thursday’s EU leaders’ summit but a deal is not expected before the finance ministers meet again on February 16.
Greece’s left-wing leaders struck a defiant tone on the eve of the key talks with the EU.
Finance Minister Yanis Varoufakis did not rule out clashing with his eurozone counterparts, saying: “If you are not willing to even contemplate a rift, then you are not negotiating.”
The stakes of the talks are high because of fears that a Greek debt default could push it out of the euro, triggering turmoil in the EU.
Greece’s debt currently stands at more than €320 billion – about 174% of its economic output (GDP).
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