World Economy

Grexit Fears Deepen

Grexit Fears DeepenGrexit Fears Deepen

Strong rumors continue to abound that Greece will default on its loan repayments and leave the single currency zone.

The cash-strapped country has suggested Russia could provide “a significant fiscal breath” if it takes part in the “Turkish Stream” gas pipeline, but some fear such a solution may come too late, Euronews reported.

“The state is running out of cash, definitely, they are scraping funds from everywhere they can find it right now, but I think we have enough liquidity to keep on,” believes political analyst Dimitris Katsikas.

“But the crash test will come in June. At the end of the day, we’re going to need a new deal, and if there’s no agreement over that, then yes, we’re going to run out of money.”

Greece has been locked in talks with the EU and the IMF over its repayments and it risks running out of money within weeks unless it submits a credible reform plan.

The ECB is said to be examining plans to create a virtual second currency within the euro bloc to help Athens avoid paying civil servants with IOUs.

Some analysts say Greece should be put out of its misery sooner rather than later. Michael Hewson of CMC markets said: “I think a Greek exit is inevitable. The status quo is no longer a viable proposition. So really it’s a matter of how we manage the process of either restructuring Greece’s debts or managing a new program. Because the way things are at the moment, we can’t continue the way we are.”

Although the Greek government has repeatedly said it wants to honor its debts, any default would force the ECB to act and possibly restrict Greek banks’ crucial access to emergency liquidity funding.