Closed shops in Athens: How long the country is still able to pay ?
Greece is under acute threat of a sovereign default from the perspective of the German Bundesbank. “The situation in Greece is still worrying,” said the central bank in its published in Frankfurt on Monday Monthly report (PDF). Currently are Athens and Greek banks therefore only able to pay, because the banks with Ela-emergency loans (“Emergency Liquidity Assistance”) the Bank of Greece are supplied.
Without a give in the debt dispute threatens the state bankruptcy. The ongoing until the end of June utility of creditors could not continue under the current conditions, according to the monthly report released Monday by the German central bank.
Greece must therefore by economic and fiscal policy reforms quickly create the basis for sustainable public finances, warns the Bundesbank. “This is the current Greek government’s responsibility to bring forward appropriate proposals to implement agreements reached, and so that their contribution to avoid bankruptcy of the state with strong turmoil in Greece.”
struggle for more grants
The government of Prime Minister Alexis Tsipras left struggling for three months by the disbursement of grants. European donors and the International Monetary Fund (IMF) link the release of 7.2 billion euros from the current utility of a comprehensive reform package.
Greek banks get in the normal way, no fresh money more from the European Central Bank (ECB) and are therefore dependent on expensive Ela-emergency loans. According to financial circles of Ela-frame was last extended to 80 billion euros. Thus, the Federal Reserve stuffs the holes caused financial institutions by outflows in the billions. For citizens and business premises due to the uncertain future of their accounts empty.
With the emergency loans to buy Greek banks always new short-term government securities (T-bills) to when the previous papers are due. Bundesbank President Jens Weidmann sees this practice critical: “The fact that banks loans are granted without market access, to fund bonds of their own state, which is even without access to the market, I think, overlooking the prohibition on monetary state financing is not in order.” From the perspective the Bundesbank has to rule on the provision of additional financial resources but be taken by national governments and parliaments – and not by the central banks
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Greece itself in the delicate situation maneuvered
The government in Athens has maneuvered convinced the Bundesbank itself in the delicate situation: “The prospects had brightened considerably by the end of 2014, because after a harsh adjustment phase had again taken root growth. “The state of public finances would have no” can be stabilized excessive additional fiscal measures “. Especially as the financing costs of the state because of the scope of the Utilities highly concessional interest rates in spite of the very high debt ratio were not unreasonable: “Thus, the interest expenditures were in 2014 in relation to GDP below that in Portugal, Italy and Ireland.”
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But by the abrupt change of course under Tsipras of reform and stabilization rate was interrupted and partially reversed been. “The uncertainty thus generated affects the public finances indirectly by the setback in economic activity, but also directly through the apparently declining willingness to pay taxes,” said the Bundesbank. Moreover, additional expenditures had been decided.
As a result of access to capital markets in 2014 to some extent restored the risk premiums on Greek government bonds have increased sharply and lost again gone, stressed the Bundesbank: “But the – in the meantime until the end of June extended – utility under the current conditions can not be continued, that is, no aid loans and transfers to be paid more, the solvency of Greece is under serious threat. “Without substantial reforms in Greece a sustainable solution is impossible.
Even Economy Minister Sigmar Gabriel called on Greece on Sunday to reforms. In return, he asked the country a third rescue package promised.
Federal Finance Minister Wolfgang Schäuble (CDU) had said a week ago in the Frankfurter Allgemeine Sonntagszeitung: “If Greece fulfills all obligations and still need further help, we are considering a third program.” But the conditions were not met by far
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