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Friday, 19 June 2015

Greece told to accept debt deal or 'head towards default'

European Council President Donald Tusk told Greece to accept a debt deal with its international creditors or face defaulting.
An emergency summit will be held on on Monday to address Athens' future in the eurozone.

"The situation of Greece is getting critical," Mr Tusk said in a video message.

"We are close to the point where the Greek government will have to choose between accepting what I believe is a good offer of continued support or to head towards default."

Meanwhile, the European Central Bank has raised the level of emergency funding for Greek banks by an unspecified amount following a request from the Bank of Greece, a Greek bank source said. 
"There was no problem with the financing of Greek banks," the source said, adding that bank governors were expecting a "positive result" at an emergency eurozone leaders summit on Greece on Monday. 

According to state agency ANA, the funding cap was increased by €3.3 billion. 
The Bank of Greece had earlier insisted that the country's banking system was stable amid a rush of deposit withdrawals this week fuelled by fresh deadlock in Greece's loan talks with its EU-IMF creditors. 

"The governor of the Bank of Greece has confirmed the stability of the banking system, which is fully safeguarded by the joint actions of the Bank of Greece and the European Central Bank," Greece's central bank said. 
Bank of Greece governor Yannis Stournaras had earlier met with the top Greek negotiator in European Union-International Monetary Fund talks, junior foreign minister Euclid Tsakalotos. 

Greece today insisted a last-ditch deal on its debt was possible and dismissed "terror scenarios" of a default that is looking increasingly likely unless an accord is concluded. 
Meanwhile, eurozone leaders will hold an emergency summit on Monday to try to avert a Greek default.

It comes after bank withdrawals accelerated and government revenue slumped as Greece and its international creditors remain deadlocked over a debt deal.
Finance ministers of the 19-nation currency bloc failed to make any breakthrough on a cash-for-reforms agreement at talks in Luxembourg yesterday.
Greece must make a crucial debt repayment to the International Monetary Fund within the next two weeks.

"Regrettably ... too little progress has been made. No agreement is in sight," Jeroen Dijsselbloem, chairman of the Eurogroup, told a news conference.
Ministers sent a strong signal that it is up to Greece to make new proposals, he said.
The European Central Bank told the meeting it was not clear whether Greek banks would be open on Monday, officials said.

The ECB's governing council will hold a special conference call today, the second in three days, to consider adding more emergency liquidity for Greek banks facing a quickening drain on their cash, two people close to the situation said.
Earlier, Mr Tusk said in a statement he had summoned heads of state and government of the euro area to meet in Brussels on Monday to discuss Greece "at the highest political level".
IMF Managing Director Christine Lagarde said further dialogue was needed "with adults in the room".

Greece said it had put a "radical proposal" for budget monitoring on the table to show its willingness to reach a deal, Finance Minister Yanis Varoufakis said.
He accused his European peers of being dangerously close to accepting "an accident", saying they had refused to discuss his idea for braking public spending.

Mr Dijsselbloem said if there was a last-minute deal next week, there would have to be some extension of the current bailout to allow time for disbursement.
Greek savers pulled out about €2bn between Monday and Wednesday after weekend negotiations collapsed in Brussels, senior banking sources said.

That is double the amount that the ECB granted Greek banks in extra emergency liquidity assistance (ELA) only on Wednesday.
The IMF dashed any hope that Athens could avert default if it fails to repay a €1.6bn loan by the end of June, piling pressure on Prime Minister Alexis Tsipras, who shows no sign of yielding to the lenders.

If deposit flight continues to outpace ELA, it could force Greece to impose capital controls, as Cyprus did in 2013, to ration cash withdrawals and stop money fleeing the country.
The €2bn taken out in just three days represents about 1.5% of total household and corporate deposits of €133.6bn held by Greek banks as of end-April.

Mr Tsipras, elected on a promise to end austerity, is demanding a "political level" bargain in which European creditors promise Greece debt relief before he will make any more concessions.
  http://www.rte.ie/news/2015/0619/709158-greece-eurozone/
19/6/15

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