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Greece likely to exit euro and EU without deal with creditors

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Athens is likely to leave the eurozone and the EU if it fails to reach an agreement to unlock a €7.2 billion bailout installment, said a statement from the Bank of Greece.

“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 said in a statement Wednesday.

The manageable debt crisis Greece is now facing may turn into an uncontrollable and broader crisis, dangerous for the banking system and financial stability, the bank added. An exit from the eurozone would only add to hostility that is already felt, and, as a result, a deep exchange rate crisis would make inflation skyrocket.

“All this would imply a deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership. From its position as a core member of Europe, Greece would see itself relegated to the rank of a poor country in the European South,” the bank said.

This is why the bank called a debt deal a “historical imperative” impossible to ignore.

The five-months of inconclusive negotiations have led to a high level of uncertainty in Greece, which is hitting the country hard, the bank said. This reflected in higher Greek bond yields and Greek businesses losing financing in the capital markets.

“On the domestic front, heightened uncertainty was reflected in the deterioration of economic sentiment and confidence indicators and in bank deposit withdrawals by businesses and households.”

Between October 2014 and April 2015 €30 billion was withdrawn from deposits, the bank said.

Fears of Greece leaving the euro escalated after the country delayed a €300 million payment to the IMF on June 5, saying it’ll bundle four June payments totaling €1.6 billion together and pay them at the end of the month.

So far the negotiations have failed to meet halfway over reforms in Greece which is the main condition for Athens to receive the last €7.2 billion tranche of the second bailout. But the Bank of Greece said a compromise on the main conditions and smaller issues remained to be covered.

Greece maintains it won’t accept new deep austerity cuts while the country’s creditors – the IMF, the ECB and the European Commission – insist on more financial responsibility from Athens.

Despite some write-offs of Greek debt made by creditors in 2012, its public debt currently stands at €316 billion, about 175 percent of the country’s GDP. The maximum acceptable level for the EU should be not more than 60 percent of GDP, according to the EU’s Stability and Growth Pact.

Austerity measures have seen unemployment rise from 12 to 27 percent in three years, GDP has fallen by 26 percent since 2008, Greeks are under a huge tax burden, and the number of people living below the poverty line is increasing every day, said Prime Minister Alexis Tsipras last week. His Syriza party came to power promising to end austerity.

Over the last five years, Athens has reduced pensions by up to 44 percent, reduced salaries in the private sector by up to 32 percent, and seen its labor market crushed, he added.


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  • noode US

    Wise Greeks would simply default as the West wants to rob and destroy Greece. By playing the same dices as Creditors like “Offering Unacceptable Series of Solutions” Greece must get out from the claws of IMF, Goldman Sachs, Citibank, and JPMorgan and just walk-away. Wise Greeks must play a drama of over-throwing government and get rid of IMF, Goldman Sachs, Citibank, and JPMorgan, Western Bankers and Western influence forever.

  • ManBangHerMan

    Christine Lagarde- IMF chief says “Greece must pay up.”
    But, No deal struck at Eurogroup meeting.
    Timeline : June 30, 2015
    Greece’s current bail-out deal expires
    Greece must also make all its IMF payments by this date or it will be in arrears to the Fund.

    The current bailout for Greece expires on 30 June when Athens is also due to repay the IMF around €1.6bn. Lagarde said if the payment is not made on time, Greece will be declared to be in default and would disqualify itself from receiving any further IMF funds.

    Greeks Simply Default & Simply Walk-Out Euro.

  • noode US

    No deal: Greece defaults on IMF and ECB repayments; ECB pulls plug on emergency bank assistance leading to run on Greek banks, capital controls and potential Grexit.

    The British, Germans and other EU members are making preparations for a possible Greek exit from the eurozone as tensions ratchet up between Greece and its creditors.

    Greece’s central bank 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.

    So, GRExit is ineluctable by June 30, 2015, Who is Next?
    Are clouds shifting towards PORExit or BRExit???

  • noode US

    Ireland pushed into bailout by European Union
    The government and the banks were trying to find the least worst course of action as two Irish banks were about to run out of money. Somewhere in late 2010, The IMF’s Executive Board approved December 16 a three-year lending arrangement for Ireland, totaling €22.5 billion. The loan is part of an international rescue package worth €85 billion that also involves the European Union, European bilateral lenders, and financing from Ireland’s own cash reserves. Continued liquidity support for Ireland’s banks from the European Central Bank is an essential component of the program. Ex-Finance Department Secretary General John Moran said “The reality of the situation is that we are spending more money than we are paying into the system. We are still putting debt on future generations for us to live”.

  • noodde US

    Ukraine ultimatum to creditors ‘last chance’ to reach deal over debt, as Ukrainian debt rose on Friday to a three-week high.
    With the restructuring deal, Ukraine has to come up with $15bn of savings as part of a broader International Monetary Fund-led $40bn bailout aimed at shoring up the Ukrainian economy, which has been pushed close to bankruptcy by years of economic mismanagement and an eastern separatist conflict. As Ukraine’s issue is completely Western created one with a false promise of resolving the issue, Ukraine must convince US, Canada and UK to repay Ukraine’s debt.

    Somewhere else on this planet too…
    An anti-austerity march and demonstration in Bristol, London and Glasgow. Protesters gather to demonstrate against the government’s continuing austerity programme.

  • noodde US

    In a Sleep Country Canada, more than a half of Canadians are not aware that Canadian Prime Minister Stephen Harper is selling-out Canada to the poverty for cheap by means of TPP.
    Most of the Canadians never heard of TPP, as they were busy boozing beer!

  • noode US

    “Democracy cannot be blackmailed, dignity cannot be bargained,” Greek prime minister, Alexis Tsipras’ Syriza party said in a statement on Sunday, announcing the protest.

    “Workers, the unemployed, young people, the Greek people and the rest of the peoples of Europe will send a loud message of resistance to the alleged one-way path of austerity, resistance to the blackmail (democracy) and scare-mongering.”

  • Cody

    BRExIT : Majority of electorate would vote for UK to leave EU in latest poll

    When asked how they would vote in a referendum on membership, 51% said they would opt to leave compared to 49% who would vote to stay in.

    In a similar survey conducted in November 2014, 43% said they would opt to leave compared to 40% who would vote to stay in, where as 17% voters were unsure. PDF : http://ourinsight.opinium.co.uk/sites/ourinsight.opinium.co.uk/files/vi_04_11_2014_tables.pdf

    Which leads to a question,
    Can a notorious guy – US join EU, or UN ,NATO, TTIP and TPP are just enough?


    Greece’s prime minister Alexis Tsipras demonstrating true Democracy, has announced a snap referendum on July 5th to let citizens of Greece to vote for their future via election. The ruling Syriza party urged voters to reject “the ultimatum by the lenders. “ Without a deal, Greece faces a debt default on June 30 and a collapse of its banking system as early as Monday.

    Speaking to Greek television tonight, Mr Tsipras said: “These proposals, which clearly violate the European rules and the basic rights to work, equality and dignity show that the purpose of some of the partners and institutions was not a viable agreement for all parties, but possibly the humiliation of an entire people.”

    Greece’s prime minister Alexis Tsipras has demonstrated true Democracy by allowing the citizens of Greece to vote for their future via election.
    This is an absolute opposite case, but fairly way positive approach of true democracy any where else in this planet.
    This is an absolute opposite case to TTIP, TPP or TISA where trades are negotiated secretly without public awareness.
    The Hero of true democracy, Greece’s prime minister Alexis Tsipras sets a perfect example to “True Democracy” while North Americans have just dream about “True Democracy”.

    Will President of United States of America (already sold to the corporate world) ever throw any referendum to let the citizens decide for the policies like TTIP, TPP or TISA which are directly hurting them to deep wounds?

    To All of my North American Buddies – just “Have a nice Sleep, and Dream fantasy. ”
    And wake-up on the streets empty-hand. “Sleep Tight.”

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