22nd June 2015
European finance bosses are set to meet on Monday in a bid to finally find a resolution to Greece’s escalating debt crisis.
On Friday the European Central bank signed-off on handing emergency funds to the embattled nation’s banking sector after eurozone policymakers failed to reach a compromise to stop it defaulting on its debts.
The sum given over was not disclosed, but European Central Bank officials are holding crisis talks today in Brussels to review the situation.
On Sunday Greece’s prime minister, Alexis Tsipras, introduced a fresh set of proposals in a bid to stop it defaulting on its €1.6bn (£1.1bn) International Monetary Fund loan, which it has until the end of June to pay.
According to BBC News, one European official admitted that the new proposals, which have not yet been publicly revealed, held plenty of promise.
Tsipras described the new proposals as “mutually beneficial”. He will meet with the bosses of its three international creditors this morning, before he goes on to hold talks with the leaders of 18 other eurozone nations.
As a result of rising fears that Greece will default and therefore risk leaving the currency bloc, and possibly the EU, depositors have already withdrawn billions from Greek banks. According to the Financial Times, savers pulled out more than €1bn on Thursday last week, taking the total for the week to €3bn, reportedly three times the typical weekly number over the past two months.
To date Greece and its creditors including the IMF, ECB and European Commission have hit deadlock as the Greek government led by the left-wing Syriza party, is refusing to budge on a number of structural reforms, in areas including VAT and pensions. Greece’s creditors have said they will not give the country another lifeline until it compromises on these key reforms.
Derry Pickford, macro analyst at Ashburton Investments said that the reason for Greek intransigence on these issues is that a large part of the ruling party is vehemently against reform, “reflecting both vested interests and strong ideological positions”.
He said: “Even though the leadership would not be completely averse to concessions here, they are worried that it could trigger a break-up of the ruling coalition and they would consequently lose power.”