Greece and the economic crisis 2015
NEWS ARCHIVE - May 12 - May 19
May 19, 2015
"Take a look at the clues. First, the song is called “One Last Breath” — somewhat appropriate for a country being squeezed by international creditors to meet their demands or lose bailout cash. Greece is seen as only a few weeks away from a debt default.
Second, Greece’s vocalist Maria Elena Kyriakou accuses an unnamed “you” (Germany, perhaps?) of betrayal and drunken lying, leaving the wounded party struggling for survival alone in the dark. Not far from how many Greeks feel about the bailout negotiations with eurozone lenders."
Greece Runs Out of Road - WSJ
"Greece is finally running out of road. But could the plethora of panicky headlines merely be a prelude to a deal?
It’s been apparent for the past few months that Greece is running out of money and would need to strike a deal with its creditors before massive repayments on bonds held by the European Central Bank fall due towards the end of July. But now it appears Greece won’t be able to cover repayments to the International Monetary Fund a month earlier, starting with a €300 million ($339 million) loan on June 5.
...Meanwhile, the Greek government is struggling to cover its ordinary bills. It can cover wages and pensions this month, according to a government spokesman, but then the crunch comes.
...The headlines have certainly unsettled investors. Yields on two-year Greek government bonds jumped sharply Monday morning while Greek bank shares took a pasting."
Varoufakis says Greece will have a deal within a week - Time Union
"...finance minister Yanis Varoufakis has good news — he thinks a bailout deal with the country's international creditors is imminent.
In a televised interview on Monday night, when pressed to give a time schedule for the deal, Varoufakis said "let's say a week." You can check out a full translation and video of the discussions here at enikos.gr.
That follows yesterday's leak to Greece's To Vima newspaper which suggested that the European Commission had offered Greece a pretty generous compromise deal. The Commission denied that such a deal had been offered."
"There has been "some progress" in talks between Greece and its international creditors, said Christine Lagarde, the managing director of the International Monetary Fund, on Tuesday. Greece has been locked in a negotiation impasse with the European Commission, the European Central Bank and the IMF over the release of the next tranche of bailout cash."
Greece's doomsday clock nearing midnight - Futures Magazine
"...Probably the biggest development over the weekend was the not-so-surprising revelation that the Greece Doomsday clock is within five minutes of midnight. In a leaked internal document, the IMF stated what any neutral observer already knows, that "there will be no possibility for the Greek authorities to repay the whole [€1.5B debt payment due in June]" without further bailouts. Adding insult to injury, European Central Bank member Yves Mersch warned that Greece was at the “endgame” and that the current situation is “not tenable.”
The Greek government can probably limp its way through the next two weeks, but the true crunch time starts June 5th, when a whopping €1.5B of debt payments to the IMF is due over a 14-day period; this represents twice the size of last month’s debt payment, which already forced the government to draw on the IMF’s reserve account and raid municipal funds. With seemingly no near-term deal in the works, traders can expect headlines out of Greece to drive trade in the euro more and more as we head into early June."
May 18, 2015
"Bank officials fear more withdrawals ...in Athens, bank officials say they now expect more people to remove savings, despite the government promising today that it won’t impose a levy on deposits.
...Around €35bn is thought to have been withdrawn from Greek bank accounts since last December. Economists, politicians, bankers and officials are convinced that a Cyprus-style bail-in, if executed, would be the straw that broke the camel’s back.
“We would see the revolt that this crisis has not yet produced. There would be blood in the streets. The Greeks are not like the Cypriots,” added the Bank of Greece official."
Greece says it needs bailout deal by end of May - AP Yahoo
"...Greece's cash-strapped government signaled Monday it needs a deal with bailout lenders by the end of the month to avoid defaulting on its debt this summer, as renewed concern rattled the country's finance markets.
Greece's creditors want the country to agree to a series of economic reforms before giving the country the final installment of its bailout plan, worth 7.2 billion euros ($8 billion).
The new left-wing government is proposing measures that might protect Greeks hammered by a six-year recession, but lenders say they remain too vague.
Athens has already pooled cash reserves from schools, hospitals and local government to fund the state's debt payments. And Sakellaridis confirmed the government this month used a reserve account with money in a currency unit used by the IMF to repay a loan to the Fund."
Net budget surpasses its target €500m - Custom Today
"The Greece Ministry of Finance’s general accounting office released its headline budget figures for April 2015. The numbers reflect the country’s success watching every penny it spends and trying to build up revenue through tax collection, all in an effort to hoard its available cash and survive a summer of debt payments. "
The ghost factories of Greece – Video - euronews
"Reuters photographer Yannis Behrakis, himself Greek, made a 2,500 km trip from Athens to northeastern Greece via the Peloponnese region in the south to show the remnants of the once-flourishing Greek manufacturing industry, which has suffered a 30 percent drop in production from its peak.
Abandoned factories, previously making goods from timber to textiles and cooking oil, are often looted, adding to the scenes of desolation."
Greece must reform to avoid insolvency: Germany's Bundesbank - Yahoo News
"The current Greek government is obliged to make appropriate proposals, to implement those agreements that have been reached and thereby do their part to avoid the insolvency of the state, with strong repercussions for Greece," officials wrote in the report.
"A sustainable solution is not possible without substantial reform in Greece," the report said. "Financial help should be linked to the relevant preconditions," it added."
May 17, 2015Greece Remains Defiant as It Seeks Creditor Deal This Week - Bloomberg
"Greece’s government said it won’t back down on election pledges to end austerity even while seeking to agree on a deal with creditors as soon as this week to unblock financing and avert a default.
...Greece won’t accept “take-it-or-leave-it” proposals, and the issue of a national referendum on reforms “will depend on whether the creditors impose an ultimatum,” Syriza’s Filis said. A Greek referendum might speed up the decision process on moving forward, German Vice Chancellor Sigmar Gabriel said Sunday in an interview published in Bild am Sonntag. A “third aid package for Athens is only possible if reforms are also implemented,” he said. A Greek exit from the euro would pose a political challenge and not an economic one, but “no one would have trust anymore in Europe if, in the first big crisis,” a currency member quits, he said."
Greece must choose between 2 catastrophes - Business Insider
"The Greek finance minister says his country would be better off if it was still using the drachma. Deep down, he says, all 18 countries using the single currency wish that the idea had been strangled at birth but understand that once you are in you don't get out without a catastrophe.
...Varoufakis wants more financial help but not if it means sending the Greek economy into a "death spiral". Greece's creditors will not stump up any more cash until Athens sticks to bailout conditions that Varoufakis says would do just that."
Germany says reforms alone will get Greece fresh aid - Gulf News
"German Economy Minister Sigmar Gabriel has warned in an interview published in a German newspaper on Sunday that the Greek government could only get further funds if it carried out reforms.
...He warned about the consequences of Greece quitting the single currency bloc, saying: “A Greek exit would not only be highly dangerous economically but also politically.”
Gabriel said that if one country were to leave the Eurozone, the rest of the world would look at Europe differently: “Nobody would have any confidence in Europe any more if we break up in our first big crisis. We shouldn’t talk ourselves into a Grexit.”
Tsipras Refuses to Give Ground in Greece Aid Negotiations - Yahoo Finance
"An agreement between Greece and its international creditors to unblock financing and avert a default looked elusive after Greek Prime Minister Alexis Tsipras said he won’t strike a deal at any cost.
“There’s no doubt that an agreement must be reached,” Tsipras said late Friday at a conference in Athens. “But those who think that the Greek side’s resistance can be tested or that its red lines will fade as time passes, would do well to forget it.”
What does Greece count on without TAP? - Trend
"The ambiguous position of the Greek government on the projects implemented by Azerbaijan, and in which Greece itself is among the major players, is causing a growing concern of all the involved parties.
Previously, the EU urged the parties, in particular Greece, to comply with commercial agreements concluded as part of the Trans-Adriatic Pipeline (TAP).
The US too didn’t remain silent calling upon the Greek leadership to abandon the “Turkish Stream” project in favor of TAP. And now the consortium for TAP’s development has expressed its opinion on the matter.
...According to TAP, the project will ensure the influx of investments to Greece worth 1.5 billion euros, and will create over 10,000 new jobs. "
May 15, 2015Greece pays public sector wages to avert fresh economic crisis - The Guardian
"Greece avoided another financial crisis by paying about €500m-worth of wages to public sector workers, but suffered another downgrade of its credit rating.
“The mid-May payments of wages and pensions ... were made within the scheduled timeframe,” the finance ministry said. They had been due on Friday.
The payment came as Greece remained locked in talks with its creditors in an effort to release €7.2bn of bailout funds to avoid a default and exit from the eurozone.
In a sign the leftist Syriza government was preparing to compromise over some of the reforms demanded by Brussels and the International Monetary Fund, it said it would push ahead with privatisation of its biggest port, Piraeus. It is in talks with China’s Cosco, which manages two container piers at the port, about selling a majority stake.
...DBRS ratings agency downgraded Greece further into junk status, cutting it from B to CCC with a negative outlook. "
Greece Teeters Towards Bankruptcy - VOA
"Greece’s finance minister said Thursday he wished his country had never joined the euro currency — and warned international creditors that he would refuse to sign any bailout plan that would send Greece into a "death spiral." With a bailout agreement still seemingly a long way off, there are dangers that Athens could run out of money in the coming days.
...Greek Finance Minister Yanis Varoufakis has warned that the country could run out of cash to pay its bills within the next two weeks. Speaking Thursday, he explained why Greece has rejected EU demands for deeper reforms.
He said that if he signs such a deal, he would be just another finance minister who signed a medium-term fiscal adjustment program while knowing it is not feasible. And math proves that it is not feasible."
May 14, 2015Greece and Germany may have found a way out of the bailout crisis - San Francisco Gate
"Despite the incredible economic pain Greece has taken in recent years — on a scale similar to the Great Depression — support for leaving the euro is still low. Polling suggests something like two thirds of Greeks want to stay in the euro.
But something like four fifths of Greeks also want to reject the Memorandum of Understanding (the austerity deal and structural reforms Greece agreed to access bailout funds).
It's quite clear now that these two views are basically incompatible. Syriza was elected on a platform advertising the end of austerity while Greece remained in the euro, suggesting this would be possible to negotiate. In terms of its views on Greece's eye-watering debt burden, Syriza is correct."
Greece wants ECB bond pushback - Yahoo
"Greece wants the European Central Bank to agree for Athens to delay payment on some 27 billion euros ($30 billion) in Greek bonds that it will otherwise be unable to repay, the finance minister said Thursday.
"It's quite simple, these bonds must be pushed into the future, this is clear also to the ECB," Yanis Varoufakis told a conference.
Four months of deadlock between Greece's radical Syriza-led government and its EU-IMF creditors over the reforms needed to release a final 7.2 billion euros in bailout funds has generated concerns Athens is running critically short of cash and may soon end up defaulting, setting off a messy exit from the euro.
Pro-government daily Avgi on Thursday said Greece was hoping to secure a deal before a 302.5-million-euro repayment to the International Monetary Fund on June 6."
Greece unblocks Piraeus port sale, invites binding bids - Reuters
"Greece had shorlisted China's Cosco Group and four other groups for a 67 percent stake in Piraeus Port last year but the sale was halted after Prime Minister Alexis Tsipras's leftist government came to power this year.
Pressing ahead on the sale is expected to be one of the major concessions offered by Tsipras to EU and IMF lenders during ongoing talks to secure aid. "
"The 50-second video, displayed on public transportation in Athens, features graphic images of wartime suffering, including people starving to death, children being sent to concentration camps, and villages being destroyed. The video's tagline is: "We claim what Germany owes to us."
...The relationship between Athens and Berlin has been deteriorating rapidly since the new Greek government started accusing Germany and its other creditors of bullying."
How broke is Greece - Yahoo
"All eyes were on Greece at the start of the week, as speculation mounted that the debt-stricken country would not be able to meet a 750-million-euro loan repayment to the IMF due Tuesday.
...In fact, Greece made the IMF payment a day earlier than expected.
What surprised analysts, however, was how it paid the bill - Greece emptied an IMF holding account to repay the loan, a Greek central bank official confirmed to CNBC Wednesday.
...On Thursday, Greece's Finance Minister Yanis Varoufakis was reported by Reuters as saying Greece's payment of debt to the ECB over July and August should be pushed back.
According to the news wire service, Varoufakis suggested a debt swap to push back payments to the ECB would help Greece, but said that this would not occur because the idea filled ECB President Mario Draghi's "soul with fear."
Minister pledges new civil service evaluation scheme in weeks - eKathimerini
"The Greek government, which has riled lenders recently with the reversal of some reforms in the public sector, said that it will introduce a new assessment scheme for civil servants within a month.
Speaking at the Economist conference in Athens on Thursday, Alternate Minister for Administrative Reform Giorgos Katrougalos said that the evaluation system to be brought in by the government would aim to improve the performance of civil servants. "
May 13, 2015Greece plays down referendum option, economy stutters - Economic Times
"Greece's government on Wednesday ruled out rushing to a referendum to secure public support for unpopular reforms, opting instead to make a final push for a compromise with lenders by the end of the month.
...For now, Tsipras's government said its aim remained to strike a deal with its international creditors rather than turn to a referendum or early elections. At a cabinet meeting on Tuesday, Athens reiterated hopes for a deal by the end of the month - by which time it risks running out of cash without new funds.
...Failure to strike a deal could pose disastrous consequences for Greece, which scraped through a 750 million euro debt payment to the IMF this week only by emptying out its IMF reserves to avoid touching its fast-depleting cash coffers.
Central government budget data also showed the state reduced public spending by 2 billion euros compared to the targeted level in the first four months of the year, an apparent effort to preserve cash amid the financial storm. "
Greece Is Back In Recession; This Does Not Bode Well For A Debt Deal - Forbes
"We’ve the GDP figures for the various eurozone countries out today and Greece is officially and definitively back in recession. This does not bode well for the ability of Greece and the troika to come to a debt deal as recessionary times mean that the Greeks will find it near impossible to run the primary budget surplus that any deal would be predicated upon...
...Greece needs a new debt deal, a third one. We all know that and we all also know that there’s no way at all that it will be negotiated and sorted out before the end of the summer at the earliest. In order to get from here to there Greece simply needs the last €7 billion or so of the second bailout. It just doesn’t have enough cash to both run the state and also make its debt repayments without it.
However, it can only gain access to that cash if the Eurogroup and IMF agree that it is meeting the targets set under that second debt deal. They’ve already agreed, at least as a negotiating position, that Greece doesn’t need to run a 3% primary surplus this year, 1 to 1.5% would be good enough as a sign of intent. But in an economy in recession, as Greece now is, officially and definitively again, it’s near impossible to run a primary surplus without imposing yet more economic pain upon the populace. What is usually thought of as entirely counterproductive pain as well, as we generally think that in a recession a government should be running a budget deficit, not a surplus."
Shell Game? How Greece’s Latest IMF Repayment Cost Athens Very Little - WSJ
"With its $840 million payment Tuesday, Athens bought itself more time to negotiate new bailout terms with its creditors without having to deplete the country’s piggy banks at home. It pulled off the feat largely by tapping an obscure pot of money: its currency reserves held at the IMF.
...Because those SDR assets are also treated as currency reserves for member countries, governments have the right to tap them to finance various obligations, including paying back IMF loans.
There’s also no obligation to replenish the depleted SDR holdings, But Athens will have to pay interest on the SDRs it used to repay the IMF, tossing one more item on its long list of liabilities."
May 12, 2015
"Greece was forced to tap into an emergency account in order to meet a debt repayment of 750 million euros ($845 million) due Tuesday to the International Monetary Fund, a central bank source told AFP.
"That was an initiative by the Bank of Greece's governor to break the deadlock," said the source.
...With the two sides standing firm on their positions and the loan servicing payment to the IMF due, the government was informed last week by Greece's top central banker Yannis Stournaras that it could draw 660 million euros from the bank's special account that is meant to be used only in cases of "extraordinary need".
Greece taps reserves to pay IMF loan -BBC
"The government raided its reserves to make the €750m (£538m) payment on Monday, one day ahead of the deadline.
It comes after Greek finance minister Yanis Varoufakis warned his country was weeks from running out of cash.
Greece is believed to have borrowed €650m from its IMF holding account to meet the debt interest payment.
...Meanwhile, changes to the law have allowed the central government to collect €600m of local government and other public entity money to help it deal with the cash crisis, a government spokesman said.
On Monday, Mr Varoufakis warned his country's financial situation was "terribly urgent" and the crisis could come to a head in a matter of weeks.
The warning came as eurozone finance ministers met in Brussels to discuss the final €7.2bn tranche of Greece's €240bn EU/IMF bailout."
Greece clears IMF hurdle but don't relax just yet - Yahoo
"With news that talks between Greece and its lenders are making slow but sure progress and Greece made a multi-million euro loan repayment to one of its lenders a day early, goodwill towards the country is hitting highs not seen for months. But analysts warn that the money and good spirits will quickly run out.
Jeroen Dijsselbloem, the head of the Eurogroup, told CNBC that while progress had been made, there was still work to do.
"More detailed plans have been put on the table, more figures and data, so gradually we are getting somewhere. But on some of the major issues, there are still work to do. (For example on) some of the major reforms which are obviously not very popular measures but are necessary to put Greece on a sustainable footing, and back on a sustainable track," he told CNBC in Brussels Monday."
NEWS ARCHIVE - May 2015
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