By finance reporter Alicia Barry Monday 22 June 2015
Photo: Greek Prime Minister Alexis Tsipras is facing last ditch talks with his nation's European creditors. (Reuters: Alkis Konstantinidis)
Greece is facing its last chance to unlock more bailout funds at a meeting of European leaders and finance ministers tonight.
If no resolution is reached, Athens will almost certainly miss a repayment to the IMF, pushing it into default and possibly out of the Eurozone.
Five years of tough austerity has seen Greece's economy shrink by a third and unemployment almost triple - from 9.1 per cent in January 2009 to 25.4 per cent in February this year - driving tens of thousands of Greeks below the poverty line.
The left-wing Syriza Party rose to power in January, declaring that it would no longer bow to international demands for budget cuts.
However, the country's economy is still struggling, with the government locked in a battle over pension reform with its creditors.
Greece owes a staggering 320 billion euros - almost 180 per cent of its gross domestic product (GDP), the key measure of national income.
The nation is running out of money quickly as its debt bills stack up and it desperately needs its creditors to release a second bailout worth 7.2 billion euros.
Urgent need for cash to avoid 'Grexit'
The need for cash is urgent because Greece needs to pay the International Monetary Fund 1.5 billion euros on the June 30, with the IMF's managing director Christine Lagarde saying the payment deadline would not be extended.
It is also the day Greece's current European bailout expires.
Greece's biggest lenders - the European Central Bank, the IMF and Germany - are refusing to release the cash unless Greece makes further cuts to pensioners' income.
However, Syriza has dug in against the most stringent demands.
As the June 30 deadline looms, Greek savers are pulling billions of euros from the country's banks - including more than 3 billion euros in deposits withdrawn between June 15 and 18 - fearing their money could soon be trapped or become worthless.
If a deal is reached at tonight's meeting in Brussels, Greece would stay in the euro, at least for now.
If no deal is done, Greece would default on its repayment to the IMF, which would cause the ECB to pull the plug on its emergency support to banks and likely trigger a clamp down on funds leaving the country, known as capital controls, in order to prevent a catastrophic run on bank deposits.
Without international support, it would be matter of days before Greece would run out of euros and is faced with the prospect of printing its own money, such as a return to the drachma.
That 'Grexit' from the Eurozone would also see a savage reaction on financial markets, with the nation unlikely to be able to borrow money on international bond markets and also set for a massive devaluation of its new currency.
But, for now, there is still a chance for an 11th hour solution to be reached.
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