HOPES that a solution to Greece’s debt crisis would soon be found were dashed yesterday, as the country and its creditors engaged in bitter sniping over who was to blame for their impasse.
“Serious disagreements and contradictions between the IMF [International Monetary Fund] and European Union,” a senior government source said in leaked memo, adding that these were “creating obstacles in the negotiation and high risks.”
“In such circumstances, it is impossible to have a compromise. The responsibility lies exclusively with the institutions [EU and IMF] and failure to agree between them.”
European officials maintain that the ball is in Greece’s court, however, with the country needing to present a set of reforms for approval.
Fears that negotiations were unlikely to progress spooked markets. The yield on Greece’s 10-year bond rose to 11.13 per cent, after starting the day at 10.65 per cent. Stocks in Athens lost 3.9 per cent, led by sharp falls in the share price of Greece’s four largest retail banks. The Greek government yesterday announced that it would tax cash machine withdrawals to prevent deposit outflows from its banks, a move that needs approval from the European Central Bank (ECB). Today, the ECB is set to decide whether to grant additional emergency lending to Greek banks.
Late Monday night the European Commission (EC) president, Jean-Claude Juncker, said there was no thought of Greece leaving the euro. “If we were to accept that Greece could leave the Eurozone, we would put ourselves at risk because some, notably in the Anglo-Saxon world, would try everything to break down the euro area piece by piece, bit by bit,” he said. A spokesperson later backtracked on his comments, claiming “Anglo-Saxon” was a reference to markets.
Yesterday, the EC downgraded Greece’s growth and raised its debt forecast after the deterioration in the country’s economy in recent months, when it became clear that the new government was headed for victory. Greece is set to pay €200m (£150m) to the IMF. The next meeting of finance ministers will be on Monday in Brussels.