• Category: News

Greece Urged to Move Fast in Debt Deal to Save Country from Collapse

Finance ministers in the Eurozone urged Greece to stop wasting time and move swiftly to meets its debt deal commitments, which will allow the country to access more funds, before it runs out of money.

Greece Urged to Move Fast in Debt Deal to Save Country from Collapse

Jeroen Dijsselbloem, Dutch Finance Minister and head of the European zone group of finance ministers said, “We need to stop wasting time.  We have lost more than two weeks in which very little progress has been made. The real talks haven’t yet started and there hasn’t been any implementation.”

 

Greece debt deal under negotiation 

Government officials in Greece are struggling to meet demands placed by Euro zone members and the government is facing considerable risk of running out of cash. A European Union official, who anonymously spoke to Bloomberg, said that Greece only had cash to last two or three weeks.

At the same time, the European Central Banks is increasingly pressuring the Athens government, with a special scrutiny of the Emergency Liquidity Assistance that Greek lenders received from the Bank.

Alexis Tsipras has only until June to reach a more comprehensive debt deal with the Euro-area regarding additional financial support for Greece. Meanwhile the ECB is financially supporting Greek’s private sector, and in particular, the banks.

The ECB is committed to providing emergency aid as long as the banks in Greece continue to remain solvent and have solid capital, according to Mario Draghi, President of the ECB.

Although Greece will not be able to gain market access any time soon, it is unlikely that the ECB will allow Greek banks to continue using T-bills as collateral—this would be monetary financing, which is outlawed under European law.

According to Wolfgang Schaeuble, the German Finance Minister, Greece must work with EU institutions and not just go at it on its own to solve the monetary crisis facing the country.

He told reporters at a press conference, “Greece must refrain from one sided measures and instead implement what they promised to do.”

Greek has shown willingness in taking extra measures, in addition to the list of reforms it has so far proposed to Euro area members. So far, members are agitating for comprehensive discussions or technical level of discourse between the European institutions and officials who are managing the bailout and Greek officials.

Irish Finance Minister Michael Noonan asserted, “As we said previously, we have our red lines and we do not want to entertain a Greek exit from the zone; we also do not want any write downs.”

He further added, “Other than these two issues, we are prepared to take part in discussions that lead toward a solution.”

Last month, Tspiras was able to buy time and to speak with the rest of the euro zone members when the zone agreed to Greece’s proposal for an extension of its rescue plan. However, there is widespread apprehension that the negotiation process has taken a back seat ever since.

To receive more financial support from European lenders, the Greek government must present a comprehensive proposal on how to save the country from the brink of total monetary collapse

 

Market Impact

On March 9, Greek ASE stock index plunged by 4.2%, its lowest level in over three weeks. Meanwhile, the Piraeus Bank SA declined by 12% while three-year yields in Greece rose by 179 basis points by the close of markets in London.

 

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