Saturday, March 7, 2015

Europe holds 'noose around Greek necks' as Athens scrambles to make debt payments

By Mehreen Khan 06 March 2015

Alexis Tsipras says the European Central Bank is strangling the Greek economy as panic grips the cash-strapped government

Prime Minister Alexis Tsipras requested an emergency meeting with the president of the European Commission, Jean-Claude Juncker but was turned down

Greece's prime minister has accused the European Central Bank of holding a noose around the country's neck as his government rushes to assure creditors it can avert bankruptcy this month.

Speaking in an interview with Der Spiegel magazine, Alexis Tsipras appealed to the ECB to alleviate pressure on the cash-strapped country.

The ECB "is still holding the rope which we have around our necks" said Mr Tsipras, referring to the central bank's reluctance to resume ordinary lending to Greek banks at a meeting in Cyprus on Thursday.

The central bank has also rebuffed Greek appeals to raise the limit on short-term debt issuance, as it faces €6.5bn in payments over the next three weeks.

Should the ECB continue to resist Greek pleas for assistance, "the thriller we saw before February 20 will return" warned Mr Tsipras, referring to the market turmoil which gripped the country as it carried out protracted negotiations with its creditors.

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Greece made its first €300m payment to the International Monetary Fund on Friday. It faces another €1.2m in loan redemptions to the Fund before the end of the month.

But the government is scrambling to find the funds it needs to meet its obligations to creditors in March.

Athens is not due to receive €7.2bn of bail-out money before April.

ECB president Mario Draghi said a collateral waiver on Greek bonds would only be reinstated once "a successful completion of the bail-out review be put in place".

Greek banks are having to rely on an a form of expensive emergency funding to stay afloat as capital has rushed out of the country.


Ahead of a meeting of European ministers on Monday, Greece's Yanis Varoufakis submitted an 11-page list of reforms his government intends to carry out to unlock the vital cash it needs from its creditors.

The proposals include measures to fight tax evasion using students, tourists and housekeepers as undercover tax inspectors.

The "rock-star" finance minister also made an appearance on the cover of the Greece's Esquire magazine for March.

Finance minister Yanis Varoufakis on the cover of the Greece's Esquire magazine

Following the ECB's hostility to Greece's woes, Mr Tsipras asked to meet with the European Commission's Jean-Claude Juncker but was turned down, according to a Greek government source.

A meeting between the two could now take place next week to "discuss how Greece will utilise European funds to address the humanitarian crisis and unemployment", said a Syriza spokesman.

Amid fears that the country will not come good on its election promises, Mr Varoufakis has promised his Leftist government has "alternative plans" to plug its financing gap over the next 21 days.

“We go into the negotiations with optimism, with especially good preparation", said the finance minister.

The answer to the question of whether “there is an alternative is that there is one."

Athens has suggested it could use pension fund reserves at the central bank to ease its liquidity problems.

Greece's central bank governor Yannis Stournaras claimed there was "no danger" the government would fall prey to insolvency woes, insisting Greek banks were "sufficiently capitalised" and have "secure liquidity".

"There is no absolutely no problem with deposits," he said, adding the government would be working "non-stop" over the weekend to secure a "positive result" on Monday.

The news came as Eurozone growth figures suggested the bloc's sluggish recovery was becoming more evenly balanced.

A breakdown of quarterly GDP figures showed investment grew by 0.4pc in the last three months of the year, while a weaker euro provided a boost for the region's exporters.

The single currency has been in a precipitous decline since the ECB launched quantitative easing plans, which will formally begin next week.

The euro fell to its lowest level since September 2003 of $1.088, while yields on Eurozone debt from Spain to Germany fell to fresh lows in anticipation of the €1.1 trillion stimulus package.

Europe holds 'noose around Greek necks' as Athens scrambles to make debt payments - Telegraph