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Greece, Creditors To Discuss New Plan As Bailout To Expire

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| June 30 , 2015 , 13:55 IST
[caption id="attachment_69850" align="aligncenter" width="700"]Demonstrators gather under the rain during a rally organized by supporters of the YES vote to the upcoming referendum, at Syntagma Square in Athens, Tuesday, June 30, 2015 Greece is set to become the first developed nation to not pay its debts to the International Monetary Fund on time, as the country sinks deeper into a financial emergency that has forced it put a nationwide lockdown on money withdrawals. (AP Photo/Thanassis Stavrakis) Demonstrators gather under the rain during a rally organized by supporters of the YES vote to the upcoming referendum, at Syntagma Square in Athens, Tuesday, June 30, 2015 Greece is set to become the first developed nation to not pay its debts to the International Monetary Fund on time, as the country sinks deeper into a financial emergency that has forced it put a nationwide lockdown on money withdrawals. (AP Photo/Thanassis Stavrakis)[/caption] The latest news on Greece's financial woes on a day a big repayment to the International Monetary Fund is due and the country's bailout program with European creditors ends (all times local): 8.20 p.m. (22:50 p.m. IST) Greece's European creditors were assessing a last-minute proposal Athens made for a new two-year rescue deal, submitted just hours before the country's international bailout program expires and it loses access to billions of euros in funds. At midnight central Europe-time on Tuesday, the country is also set to become the first developed nation to miss a debt repayment to the International Monetary Fund, as Greece sinks deeper into a financial emergency that has forced it put a nationwide lockdown on money withdrawals. The crisis worsened over the weekend after Prime Minister Alexis Tsipras called a referendum for Sunday on creditors' proposals for reforms in return for bailout loans. That increased fears the country could soon fall out of the euro currency bloc and Greeks rushed to pull money out of ATMS. Tsipras is advocating a "no" vote. Greece's latest offer to creditors involves a proposal to tap Europe's bailout fund — the so-called European Stability Mechanism, a pot of money set up after Greece's rescue programs to help countries in need. The prime minister's office said the proposal was "for the full coverage of (Greece's) financing needs with the simultaneous restructuring of the debt," but provided no further details. Jeroen Dijsselbloem, the eurozone's top official, said the currency union's finance ministers would have a teleconference Tuesday evening to assess the proposal. Speculation had grown over the day that an 11th-hour deal might be possible, and markets edged up, though cautiously. On Monday, European Commission President Jean-Claude Juncker made a last-minute offer to Greece. Under that proposal, Tsipras would need to write to Juncker and other leaders saying he accepts the creditors' offer, which was on the table last weekend. He would also have to change his position on Sunday's referendum. Beyond accepting the creditors' proposal, Commission spokesman Margaritis Schinas said the offer would also involve unspecified discussions on Athens's massive debt load of over 300 billion euros and around 180 percent of GDP. The Greek side has long called for debt relief, saying its mountainous debt is unsustainable. Earlier, German Chancellor Angela Merkel had dampened hopes of a quick deal to extend the existing bailout. "The program runs out tonight, at exactly midnight central European time," Merkel said in Berlin. "I know of no solid indications to the contrary." However, she had said talks could continue with Athens even after the deadline. "Of course, we are not going to cut off our channels of communication after midnight tonight," Merkel said. "That means that the door is open for talks, but that is all I can say at this hour." A Greek government official said Tsipras had spoken earlier in the day with Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz. The official, who spoke on condition of anonymity in line with government regulations, didn't reveal what was said. Meanwhile, Greece is expected to miss a 1.6 billion euro ($1.9 billion) debt repayment to the IMF due Tuesday. Finance Minister Yanis Varoufakis, asked whether Greece would make the repayment, replied: "no." If Greece doesn't pay, it will be officially in arrears and will no longer have access to funding from the body until it pays its debt. This, IMF chief Christine Lagarde told the BBC last week, has "never happened in the case of an advanced economy." EU officials said Greece would lose access to more than 16 billion euros ($18 billion) in financial support once its bailout expires. The officials spoke on condition of anonymity because contacts about the program were still ongoing. Greece can apply for some other form of assistance but this could take days, even weeks, to organize. An assessment would first have to be made on whether Greece is eligible, what kind of terms the new package would function under, and the kinds of reforms that Athens would undertake in return. European officials and Greek opposition parties have been adamant that a "no" vote in Sunday's referendum will mean Greece will leave the euro and possibly even the EU. The government says this is scaremongering, and that a rejection of creditor demands will mean the country is in a better negotiating position. On the streets of Athens, long queues formed again at ATM machines as Greeks struggled with the new capital controls imposed Monday, after a bank run over the weekend following the referendum announcement. Cash withdrawals have been limited to 60 euros ($67) per day. Banks are to remain shut until at least next Monday. The elderly have been hit particularly hard, with tens of thousands of pensions unpaid as of Tuesday afternoon. Many also found themselves completely cut off from any cash as they do not have bank cards. The finance ministry said it would open about 1,000 bank branches across the country for three days from Wednesday to allow pensioners without bank cards to make withdrawals. But the limit would be set at 120 euros for the whole week, rather than the 60 euros per day allowed for those with bank cards. The crisis has roiled global markets as investors fret over the repercussions of a Greek debt default and its exit from the euro — developments that could derail a fragile global economic recovery, as well as raise questions over the long-term viability of the euro currency.   8.06 p.m. (22:36 IST) German Chancellor Angela Merkel rules out negotiations with Greece on new plans before referendum. 5.40 p.m. (19:07 IST) The eurozone's top official, Jeroen Dijsselbloem, says that the 19 finance ministers of the currency union will have a teleconference Tuesday evening to assess the latest proposals from Athens to keep the bailout negotiations going. The ministers will have their conference only 5 hours before the European part of Greece's bailout program expires. The talks were broken off when Greece's prime minister announced a referendum over the weekend. Dijsselbloem says in a tweet that he organized the meeting "to discuss official request of Greek government received this afternoon." 4.55 p.m. (19:55 IST) European Union officials say Greece would lose access to more than 16 billion euros ($18 billion) in financial support if its bailout program expires at midnight (2200 GMT). The officials, who spoke on condition of anonymity because contacts about the program were still ongoing, said three sources of money would disappear in the event of no agreement to extend the bailout. These include 1.8 billion euros from the EU's financial stability fund, 10.9 billion euros from a Greek bank rescue fund, and a further 3.4 billion euros in central bank profits. Greece can apply for some other form of assistance, but this could take weeks to organize. In that case, an assessment would first have to be made on whether Greece is eligible, what kind of terms the new package would function under and the kinds of reforms that Athens would undertake in return. 4.44 p.m. (19:54 IST) The prime minister's office says Greece remains at the negotiating table, and that the government has proposed a two-year deal with Europe's bailout fund. Details over the offer with the European Stability Mechanism, which provides financial assistance to assure the joint currency's financial stability, were sketchy. However, the prime minister's office said the deal would "fully cover its (Greece's) fiscal needs with the simultaneous restructuring of debt" and that the government "until the end will seek a viable solution within the euro." 2.31 p.m. (17:01 IST) The European Commission has indicated that an assessment of Greece's overall debt situation and its financing needs could be part of a last-minute bailout deal. Late Monday, Commission President Jean-Claude Juncker made a last-ditch effort to help Greece get a bailout deal, provided Greek Prime Minister Alexis Tsipras campaigns for staying in the euro. Beyond accepting proposals made by international creditors last weekend, Commission spokesman Margaritis Schinas said there would be unspecified discussions on Athens's massive debt load, which stood at 317 billion euros ($355 billion) at the end of 2014, or 177 percent of the country's annual GDP. Juncker had expected an answer on that before midnight Monday, but round noon Tuesday, he was still waiting.   2.10 p.m. (16: 40 IST) Greek Finance Minister Yanis Varoufakis confirmed that the country will not make its payment due later to the International Monetary Fund. When asked while walking out of the Finance Ministry about whether Greece will pay the 1.6 billion euros due to the IMF, Varoufakis said "no." His comment came amid speculation that Greek Prime Minister Alexis Tsipras is trying to craft some sort of last-minute deal with creditors before the payment is due and before the European part of Greece'sbailout comes to an end. A Greek official said Tsipras has spoken with European Commission President Jean-Claude Juncker, European Central Bank chief Mario Draghi and European Parliament president Martin Schulz. The official did not reveal what was discussed.   12.43 p.m. (15:13 IST) Stock markets across Europe trimmed earlier losses amid speculation that the Greek government is considering a last-minute effort by the head of the European Commission to break the deadlock between the country and its creditors. Jean-Claude Juncker has made a last-ditch effort to help Greece get a bailout deal, provided Greek Prime Minister Alexis Tsipras campaigns for staying in the euro. "Deep down there is a sense that some sort of compromise will be reached before the deadline — it's the eurozone way," said David Madden, market analyst at IG. The Stoxx 50 index of leading European shares was down only 0.4 percent, having earlier traded more than 1 percent lower.   12.32 p.m. (15:02 IST) The Kremlin has brushed off speculation that it could lend money to Greece. Greek Prime Minister Alexis Tsipras has visited Russia twice since April, stoking speculation that Athens could be seeking financial aid from Moscow which is eager to leverage the pro-Russian stance of the new Greek government. A Russian deputy prime minister said earlier this month that Russia could consider a loan to Greece. But Dmitry Peskov, spokesman for President Vladimir Putin, insisted that financial help is not on the agenda. Peskov said in comments carried by Russia news agencies that providing financial assistance toGreece "is a matter .... between Greece and its creditors and not ours."   12.13 p.m. (14:43 IST) The scale of the economic pain inflicted upon Greece by years of recession and strict austerity was evident in official figures showing unemployment in the country stood at 25.6 percent in March. Eurostat, the European Union's statistics agency, also said found that 49.7 percent of those aged between 15 and 24 were unemployed. Though both rates are down from the peaks they hit a couple of years back, they do still show the scale of the economic retreat in the country. The ranks of the unemployed were major supporters of Syriza in its election victory earlier this year.
11.35 a.m. (14: 05 IST)
Just hours before the European part of Greece's bailout program expires, Europe's main banking lobby group urged the country and its creditors to make a last-ditch effort to secure a deal. But it insisted that the banking sector would weather any crisis. The Brussels-based European Banking Federation said Tuesday that banks "have significantly reduced their exposures to Greece, limiting the risk of contagion through the banking system to other countries." It said "the European economic and financial system is sufficiently robust to deal with possible adverse impacts" once the program ends.
10.42 a.m. (13: 12 IST)
The Greek Finance Ministry says it will open about 1,000 bank branches across the country for three days this week to allow pensioners without bank cards to make withdrawals — but for a total of just 120 euros ($134) for the week. It was unclear why they would not be allowed to withdraw the 60-euro daily limit. Meanwhile, irate depositors called in to television stations to report that some ATMs in Athens had run out of 20-euro notes, leaving them dispensing 50 euro notes only.
10.27 a.m. (12: 57 IST)
Jean-Claude Juncker, the head of the European Commission, has made a last-ditch effort to help Greece get a bailout deal, provided Greek Prime Minister Alexis Tsipras campaigns for staying in the euro. An EU official, official who asked not to be identified because of the sensitivity for the talks, called it "a sort of last-minute offer" before Greece's bailout program runs out later and Athens needs to make a 1.6 billion euro ($1.8 billion) debt payment to the IMF. Under the offer, Tsipras would need to write to Junker and other leaders saying he accepts the offer which was on the negotiating table last weekend. He would also have to change his position on Sunday's referendum. Tsipras has said he will urge a vote against creditors' proposals.
10.04 a.m. (12:34 IST)
The mood in European financial markets remained edgy amid growing expectations that Greece will not make a repayment to the International Monetary Fund. Prime Minister Alexis Tsipras said Monday the payment would not be made if there is no deal with creditors over extending Greece's bailout. In early trading, the Stoxx 50 index of leading European shares was down 0.9 percent while Germany's DAX fell 0.7 percent. On Monday, stocks slid in the wake of Greece's decision to call a referendum for July 5 on creditors' bailout proposals and to impose controls on capital.

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