![The [Greek] European Tragedy](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWKI5s90SFm1wWTk6bs4p7CgslaC2SnYPsrZhb-B-smOufNNCSxCvpBLI9hOB-LsXZjir_PNmEiMk2-E62F3xkg96IoC6QFAaZAnPRTVH340IN9WBRmWJqPkjWlgyRj3zpALp7h6hvA58/s920/GkBack_new.jpg)
By Mehreen Khan 29 May 2015
Athens' economics minister says country will not default next week as bank deposits hit a 10-year low
Greece's economy minister has said the country will avoid a default next Friday, promising to make its latest loan repayment to the International Monetary Fund.
Syriza's Giorgos Stathakis said the cash-strapped government would pay back €304m on June 5 after weeks of threats that it would default in favour of continuing to pay its public sector workers. Mr Stathakis added there was only "a one-way street" to an agreement with the country's creditors.
The promise came as Greece's financial system continued to bleed money last month. Ordinary Greeks rushed to pull their money out of the country's banking system, with figures showing private sector bank deposits shrank by €4.6bn in April to €133.6bn, their lowest level since October 2004.
Greece's beleaguered banks have lost more than 15pc of their total deposits since December 2014 when snap elections were called to resolve the country's future in the Eurozone.
The bail-out uncertainty has also seen economic fundamentals degenerate. Greece fell back into recession at the start of the year, with official figures confirming GDP contracted by 0.2pc in the first quarter.
Business investment has also ground to a standstill in 2015, falling in by 7.5pc in the first quarter. Greek exports also shrunk by 0.6pc, according to figures from the country's official statistics body, Elsat.
Athens' Leftist government has been locked in a four-month negotiating stalemate with its international creditors over securing the release of €7.2bn in rescue loans.
The International Monetary Fund warned on Thursday that Athens would not receive any partial disbursement of funds until it signs up to a "comprehensive" package of reforms.
Despite Mr Stathakis's claims, IMF chief Christine Lagarde suggested that talks between the two sides had deteriorated in recent days.
"It's very unlikely that we'll reach a comprehensive solution in the next days," admitted Ms Lagarde.
• More bad news for Greece: everyone's buying cars worse
• Greek economy is bleeding 600 jobs a day, €22m in GDP
Yanis Varoufakis, Greece's finance minister, said the final deadline for an agreement was June 30 - when Greece's current bail-out programme expires.
The comments echoed his German counterpart Wolfgang Schaeuble who hinted that Greece would leave the euro without a new deal after the end of next month.
"That is the status quo. There is lots of technical work being done, but the programme will run until the end of June," said Mr Schauble.
"The positive news we are hearing from Athens does not correlate with what we know from the institutions."
There are fears among European creditors that the IMF is poised to pull out of any new bail-out extension for the debtor country after the summer.
Mr Varoufakis also maintained that his government would not impose “permanent recessionary measures”, including VAT hikes, being demanded by its lenders.
"We are moving towards the moment in which one of the two sides presents a take-it-or-leave-it offer," said Carsten Breszki of ING.
"Even if the current negotiations would come to a close in the coming days, it would not be the end of the Greek saga; only the end of part one."
Greece's banks have been propped up by emergency liquidity from the European Central Bank since February. The ECB has been forced to hike its cash ceiling on a near weekly basis, but has the power to remove the funds if it deems the financial system to be insolvent.
Former US treasury secretary Larry Summers warned a "Grexit" would leave rest of the continent "looking into a real abyss".
"Greece has got to get more serious, determined and clear on the reforms that it can take," said Mr Summers. "But the Europeans need to recognise that there are limits to the degree of austerity that can be imposed.
"Ultimately debt problems get solved through growth, not just through austerity."
The latest GDP figures confirm Greece has suffered the worst recession in Europe since the Great Depression.
Following talk from the IMF's chief economist and Ms Lagarde that the continent could cope with the after-effects of a Grexit, rating's agency Moody's warned a Greek departure "would change the face and the nature of monetary union".
Simon Tilford, of the Centre for European Reform, said: "A Greek exit will end the irreversibility of membership".
"Unless it acts as a catalyst for closer integration, the risk is that the Eurozone will come to look like an exchange rate mechanism rather than a currency union."
ELSTAT confirms another recession in Greece. And it was already doing worse than the US Great Depression.
Greeks say they will pay the IMF as capital flight hits record - Telegraph
Athens' economics minister says country will not default next week as bank deposits hit a 10-year low
Greece's economy minister has said the country will avoid a default next Friday, promising to make its latest loan repayment to the International Monetary Fund.
Syriza's Giorgos Stathakis said the cash-strapped government would pay back €304m on June 5 after weeks of threats that it would default in favour of continuing to pay its public sector workers. Mr Stathakis added there was only "a one-way street" to an agreement with the country's creditors.
The promise came as Greece's financial system continued to bleed money last month. Ordinary Greeks rushed to pull their money out of the country's banking system, with figures showing private sector bank deposits shrank by €4.6bn in April to €133.6bn, their lowest level since October 2004.
Greece's beleaguered banks have lost more than 15pc of their total deposits since December 2014 when snap elections were called to resolve the country's future in the Eurozone.
The bail-out uncertainty has also seen economic fundamentals degenerate. Greece fell back into recession at the start of the year, with official figures confirming GDP contracted by 0.2pc in the first quarter.
Business investment has also ground to a standstill in 2015, falling in by 7.5pc in the first quarter. Greek exports also shrunk by 0.6pc, according to figures from the country's official statistics body, Elsat.
Athens' Leftist government has been locked in a four-month negotiating stalemate with its international creditors over securing the release of €7.2bn in rescue loans.
The International Monetary Fund warned on Thursday that Athens would not receive any partial disbursement of funds until it signs up to a "comprehensive" package of reforms.
Despite Mr Stathakis's claims, IMF chief Christine Lagarde suggested that talks between the two sides had deteriorated in recent days.
"It's very unlikely that we'll reach a comprehensive solution in the next days," admitted Ms Lagarde.
• More bad news for Greece: everyone's buying cars worse
• Greek economy is bleeding 600 jobs a day, €22m in GDP
Yanis Varoufakis, Greece's finance minister, said the final deadline for an agreement was June 30 - when Greece's current bail-out programme expires.
The comments echoed his German counterpart Wolfgang Schaeuble who hinted that Greece would leave the euro without a new deal after the end of next month.
"That is the status quo. There is lots of technical work being done, but the programme will run until the end of June," said Mr Schauble.
"The positive news we are hearing from Athens does not correlate with what we know from the institutions."
There are fears among European creditors that the IMF is poised to pull out of any new bail-out extension for the debtor country after the summer.
Mr Varoufakis also maintained that his government would not impose “permanent recessionary measures”, including VAT hikes, being demanded by its lenders.
"We are moving towards the moment in which one of the two sides presents a take-it-or-leave-it offer," said Carsten Breszki of ING.
"Even if the current negotiations would come to a close in the coming days, it would not be the end of the Greek saga; only the end of part one."
Greece's banks have been propped up by emergency liquidity from the European Central Bank since February. The ECB has been forced to hike its cash ceiling on a near weekly basis, but has the power to remove the funds if it deems the financial system to be insolvent.
Former US treasury secretary Larry Summers warned a "Grexit" would leave rest of the continent "looking into a real abyss".
"Greece has got to get more serious, determined and clear on the reforms that it can take," said Mr Summers. "But the Europeans need to recognise that there are limits to the degree of austerity that can be imposed.
"Ultimately debt problems get solved through growth, not just through austerity."
The latest GDP figures confirm Greece has suffered the worst recession in Europe since the Great Depression.
Following talk from the IMF's chief economist and Ms Lagarde that the continent could cope with the after-effects of a Grexit, rating's agency Moody's warned a Greek departure "would change the face and the nature of monetary union".
Simon Tilford, of the Centre for European Reform, said: "A Greek exit will end the irreversibility of membership".
"Unless it acts as a catalyst for closer integration, the risk is that the Eurozone will come to look like an exchange rate mechanism rather than a currency union."
ELSTAT confirms another recession in Greece. And it was already doing worse than the US Great Depression.
Greeks say they will pay the IMF as capital flight hits record - Telegraph