Public Affairs Networking
18/05 – Greece slides into insolvency

Most European media report that Greece is currently sliding into insolvency. Greek Prime Minister Alexis Tsipras wrote to President Juncker, ECB President Mario Draghi, and IMF Managing Director Christine Lagarde, warning that the IMF repayment would be missed unless the European Central Bank immediately raised its curbs on Greece’s ability to issue short-term debt.

The letter, referred to in Kathimerini, The Financial Times and El Economista raises questions about how close Athens is to bankruptcy. In addition to payments due to the IMF next month totalling €1.5 billion, the Greek government has struggled to meet its wage and pension bills, which must be paid at the end of the month.

According to Kathimerini, Alexis Tsipras urges the heads of the three institutions to help find a solution to Greece’s insolvency proposing four alternatives: the increase of the ECB’s cap on Treasury bills, the disbursement of a part of the €7.3 billion tranche, the payment of the ECB’s profits by the Greek bonds worth €1.9 billion or the return of €1.18 billion that the Hellenic Financial Stability Fund (HFSF) sent by mistake to the EFSF.

Telegraph Business reports that the Greek PM has told the country’s creditors that his government won’t be able to fulfil its debt obligations, explaining that “the government narrowly avoided falling into arrears with the IMF last week after tapping its own emergency reserve account at the Fund to make a €750 million payment back to it.” Media report that Greece is supposed to repay €6.7 billion to the ECB in July and August but Greek Finance Minister Varoufakis on Thursday called for Greece’s debt payments to the ECB to be pushed back.

De Telegraaf writes that the German minister of finance Sigmar Gabriel claimed that if Greece succeeds in pushing through its needed reforms it will be eligible for a third care package. Several articles report that despite the fact that Greece is running out of money and time, there is still no agreement over its reforms list. Most Greek media and European media report that EC Vice-President Valdis Dombrovskis claimed Greece must present “complete and credible” reforms, warning that any day that passes without an agreement deteriorates the situation for the Greek citizens.

Nevertheless, and writes that a Greek government spokesman said that Greece will not accept ultimatums. Tobias Piller writes in FAZ that Alexis Tsipras is running out of options, and that he can either “lead the country into bankruptcy” or implement at least part of the reform programme agreed upon by the former Greek government and the European Commission.

Yves Mersch, member of the Executive Board of the ECB, said in the Italian press that Greece’s situation is serious, and that the country proved to be unable to abide by the rules the other member states abide by. The Greek dossier is expected to be discussed again during a European summit in Riga, next week.

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