![The [Greek] European Tragedy](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiWKI5s90SFm1wWTk6bs4p7CgslaC2SnYPsrZhb-B-smOufNNCSxCvpBLI9hOB-LsXZjir_PNmEiMk2-E62F3xkg96IoC6QFAaZAnPRTVH340IN9WBRmWJqPkjWlgyRj3zpALp7h6hvA58/s920/GkBack_new.jpg)
By Mehreen Khan 28 May 2015
Christine Lagarde admits "it's very unlikely that we'll reach a comprehensive solution in the next days", as talks take Athens to the edge of default
Creditors have burst Greece's bubble as finance ministers gather in Dresden for the G7
The International Monetary Fund has hinted Greece could be forced out of the Eurozone, as the country edges closer to judgment day with its foreign creditors.
IMF chief Christine Lagarde admitted she could not “preclude” a "potential" Greek exit, after four months of tortuous bail-out talks that have failed to get both sides closer to a deal to release aid to the country.
“No one wishes the Europeans a Grexit,” Ms Lagarde told Germany’s Frankfurter Allgemeine Zeitung, suggesting that Greece is closer to leaving the single currency than ever before.
Extinguishing hopes in Athens that the two sides were ready to draft an agreement by the end of the week, Ms Lagarde said recent optimism over the country's future had “sobered”.
• Creditors dash optimism as US warns of an 'abyss' of a euro exit
• ECB hands Greeks a reprieve as banks teeter on the brink
"It's very unlikely that we will reach a comprehensive solution in the next few days”, said Ms Lagarde, as G7 finance ministers and central bankers met in Dresden on Thursday.
She added that the prospect would not be "a walk in the park" for the single currency, but would "probably not be an end to the euro”.
Her comments reveal the mounting frustration among Greece’s paymasters at the Leftist government’s failure to cede ground over its promises to raise pensions and carry out labour reforms.
Athens has long warned it will be unable to fulfil a €300m loan obligation to the International Monetary on June 5, without external aid from its creditor powers.
However, both the IMF and European Central Bank ruled out providing any part of the €7.2bn tranche of emergency cash without a “comprehensive” deal being struck between the parties.
Ms Lagarde has previously warned there would be no “quick and dirty” deal for Greece, raising fears that the Fund is poised to pull out of a future aid package after the summer.
"We have rules, we have principles. There can be no half-baked program review,” said Ms Lagarde.
An IMF withdrawal would leave the entire financial burden of the country’s rescue on European powers - a possibility which seems to have been resolutely ruled out by the bloc’s largest creditor, Germany.
Ms Lagarde's comments came as the ECB warned Greece’s default risk had "increased sharply” and markets could be jolted out of their “muted” response to the country’s woes.
Ms Lagarde has not committed the Fund to a further Greek bail-out
“In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premia demanded on vulnerable euro area sovereigns could materialise” noted the ECB’s bi-annual financial stability report.
ECB governing council member Ewald Nowotny said on Thursday there was no “legal possibility” for Greece to be given some form of bridging financing to meet its immediate cash crunch in June.
"We do not have flexibility to do, let’s say, some financing outside our rules,” said Mr Nowotny, who is also Austria’s central bank governor.
“I know that there have been some ideas floating around that we might give some interim financing just like that. I don’t see any legal possibility for that.”
Failure to pay the IMF next Friday would see Greece fall into a silent arrears process that could last up two months before an official default is declared.
• What happens if Greece defaults to the IMF?
Should the government manage to make the latest payment, it would still face another three payments totalling €1.3bn over the course of June 12 to June 19.
Grouping the repayments together has been touted as a possible way Athens could manage its repayment schedule. This was a strategy last used by debtor nation Zambia in the 1980s.
But the Leftist government seemed to dismiss the prospect of consolidating its loans, in the absence of an agreement.
Despite hopes of an imminent deal fading, Greece maintained that it hoped for an agreement to be struck by Sunday, according to a government spokesman.
The optimism came as the country marked its 36th anniversary of EU membership.
IMF warns of Grexit threat as judgment day approaches - Telegraph
Christine Lagarde admits "it's very unlikely that we'll reach a comprehensive solution in the next days", as talks take Athens to the edge of default
Creditors have burst Greece's bubble as finance ministers gather in Dresden for the G7
The International Monetary Fund has hinted Greece could be forced out of the Eurozone, as the country edges closer to judgment day with its foreign creditors.
IMF chief Christine Lagarde admitted she could not “preclude” a "potential" Greek exit, after four months of tortuous bail-out talks that have failed to get both sides closer to a deal to release aid to the country.
“No one wishes the Europeans a Grexit,” Ms Lagarde told Germany’s Frankfurter Allgemeine Zeitung, suggesting that Greece is closer to leaving the single currency than ever before.
Extinguishing hopes in Athens that the two sides were ready to draft an agreement by the end of the week, Ms Lagarde said recent optimism over the country's future had “sobered”.
• Creditors dash optimism as US warns of an 'abyss' of a euro exit
• ECB hands Greeks a reprieve as banks teeter on the brink
"It's very unlikely that we will reach a comprehensive solution in the next few days”, said Ms Lagarde, as G7 finance ministers and central bankers met in Dresden on Thursday.
She added that the prospect would not be "a walk in the park" for the single currency, but would "probably not be an end to the euro”.
Her comments reveal the mounting frustration among Greece’s paymasters at the Leftist government’s failure to cede ground over its promises to raise pensions and carry out labour reforms.
Athens has long warned it will be unable to fulfil a €300m loan obligation to the International Monetary on June 5, without external aid from its creditor powers.
However, both the IMF and European Central Bank ruled out providing any part of the €7.2bn tranche of emergency cash without a “comprehensive” deal being struck between the parties.
Ms Lagarde has previously warned there would be no “quick and dirty” deal for Greece, raising fears that the Fund is poised to pull out of a future aid package after the summer.
"We have rules, we have principles. There can be no half-baked program review,” said Ms Lagarde.
An IMF withdrawal would leave the entire financial burden of the country’s rescue on European powers - a possibility which seems to have been resolutely ruled out by the bloc’s largest creditor, Germany.
Ms Lagarde's comments came as the ECB warned Greece’s default risk had "increased sharply” and markets could be jolted out of their “muted” response to the country’s woes.
Ms Lagarde has not committed the Fund to a further Greek bail-out
“In the absence of a quick agreement on structural implementation needs, the risk of an upward adjustment of the risk premia demanded on vulnerable euro area sovereigns could materialise” noted the ECB’s bi-annual financial stability report.
ECB governing council member Ewald Nowotny said on Thursday there was no “legal possibility” for Greece to be given some form of bridging financing to meet its immediate cash crunch in June.
"We do not have flexibility to do, let’s say, some financing outside our rules,” said Mr Nowotny, who is also Austria’s central bank governor.
“I know that there have been some ideas floating around that we might give some interim financing just like that. I don’t see any legal possibility for that.”
Failure to pay the IMF next Friday would see Greece fall into a silent arrears process that could last up two months before an official default is declared.
• What happens if Greece defaults to the IMF?
Should the government manage to make the latest payment, it would still face another three payments totalling €1.3bn over the course of June 12 to June 19.
Grouping the repayments together has been touted as a possible way Athens could manage its repayment schedule. This was a strategy last used by debtor nation Zambia in the 1980s.
But the Leftist government seemed to dismiss the prospect of consolidating its loans, in the absence of an agreement.
Despite hopes of an imminent deal fading, Greece maintained that it hoped for an agreement to be struck by Sunday, according to a government spokesman.
The optimism came as the country marked its 36th anniversary of EU membership.
IMF warns of Grexit threat as judgment day approaches - Telegraph