The words Greece and ‘bankruptcy’ seem to go hand in hand these days. ‘Grexit’ as far as the eye can see. But is Athens really about to go belly up, and is an exit from the eurozone really the only way out?
For months, pundits have been warning of a looming Greek default. The country’s cash reserves are drying up. But if that’s so, how has Athens managed to continue to meet its debt repayment deadlines? It’s certainly not thanks to a flood of tax money flushing into state coffers. No, it’s mainly because of the European Central Bank (ECB), DW reported.
“Greek commercial banks are currently being kept afloat by emergency liquidity courtesy of the ECB. They use this money to acquire short-term treasury bills from Athens. That buys the government some breathing space – at least for a couple of weeks,” said Nicolaus Heinen, a Deutsche Bank analyst.
To help the country make ends meet, the central bank has also begun tapping another source of funds: It’s ordered municipalities and state-owned entities, from mayor’s offices to kindergartens and hospitals, to hand over their cash reserves.
It’s hand-to-mouth times in the Mediterranean nation. A state living from repayment to repayment, staring at a very packed schedule: From June to September alone, Greece will have to transfer some 5.4 billion euros ($6 billion) to its biggest creditor, the International Monetary Fund (IMF).
No Money
However, that’s money it doesn’t have, which is why it’s been spending nearly four months trying to convince its international creditors to unlock the final 7.2-billion-euro tranche of its 240-billion-euro bailout.
But even that won’t cut it. To repay its debt including interests it would likely need a third aid package. The problem is that the lenders have ruled out giving Greece more money until Prime Minister Alexis Tsipras has presented them with a convincing list of reforms. So far, however, that’s something his hard-left government has refused to do.
Europe Needs Greece
Although no one’s expecting a breakthrough at Monday’s meeting of eurozone finance ministers in Brussels, Nicolaus Heinen is confident that the creditors will eventually unblock the last installment – at the 11th hour, end of June.
“Greece and its eurozone partners are going agree that Athens has done just enough to warrant opening the tap and let the funds flow, in order to secure some level of systemic stability,” the EU expert told DW.
And that won’t be the end of it, predicted Heinen, who said a third aid package was likely in the pipeline.
