Greece resumes efforts to break deadlock as default looms
Greece is struggling to amass cash to pay its pensioners and employees this week, as the country and its creditors resume efforts to break the deadlock in bailout talks.
Europe’s most-indebted state is counting on deposits of local governments, cities and other funds to meet end-of month payments of over 1.5 billion euros ($1.6 billion) after euro area finance ministers on Friday said they won’t disburse more aid until bailout terms are met. That may further strain liquidity buffers at banks, after households and companies withdrew almost 1.3 billion euros in savings last week, according to a person who’s not authorized to speak publicly on the matter.
“Despite the inelegant way the government did it, we will deposit our reserves at the Bank of Greece,” Yiannis Boutaris, Mayor of Thessaloniki, Greece’s second-largest city, said in comments on Mega TV. As polls show that a large majority of Greeks wants to stay in the euro zone, keeping the country in the currency regime should be the governing Syriza party’s “red line,” he said.
Greece’s anti-austerity coalition has fought to unlock aid since striking a deal to extend its bailout program in February. The government has repeatedly expressed confidence that a deal was imminent, only to be rebuffed by euro-area officials seeking concrete steps. Last week was no different: days after Finance Minister Yanis Varoufakis said views were converging, his counterparts across the region hit him with a volley of criticism.
Greek bonds fell on Friday, sending yields on three-year notes up 144 basis points to 26.3 percent.
Systemically Manageable
Greek Prime Minister Alexis Tsipras held a call with German Chancellor Angela Merkel and Eurogroup President Jeroen Dijsselbloem to discuss progress in negotiations, a government official in Athens said Sunday. Germany’s Bild newspaper reported Monday that Tsipras asked Merkel to convene an emergency European Union leaders’ summit. A Greek government spokesman denied the report in a text message.
Support for the government’s confrontational stance fell to 46 percent in a University of Macedonia poll for Skai TV published on Tuesday, compared with 56 percent a month earlier. Two polls published over the weekend showed a most Greeks want the government to strike a compromise with creditors.
According to a Kappa Research survey published in To Vima weekly, 71.9 percent of those surveyed said a deal with creditors would be best for the country, while 23.2 percent said they prefer a clash. An Alco survey in Proto Thema newspaper showed that half of respondents want a compromise even if creditors reject Greek government demands, while 36 percent said the government should opt for a “rupture.”
