Eurozone finance ministers head to Luxembourg this morning knowing that another day of failed talks could see Greece default on its debts and crash out of the single currency.
Today had been considered the final chance to strike a deal in time for Greece to avoid a default. The prospect of a breakthrough is so slim, however, that officials are already lining up plans for emergency meetings spilling into the weekend.
Asked if there could be an agreement today, Greek finance minister Yanis Varoufakis said: “I do not believe so.” But he added that reaching a deal quickly is “a moral duty”.
Eurogroup boss Jeroen Dijsselbloem also admitted that the chances of finding a deal today are “very small.”
But Greece is desperately short on time. Its government must make a €1.6bn payment due to the IMF at the end of the month, which has already been deferred via a so-called bundling.
If missed, Greece would be in uncharted territory, with life support loans to its banking system, which are contingent on a deal, hanging in the balance.
The European Central Bank (ECB) last night lifted the cap on emergency liquidity assistance (ELA) that Greek banks can borrow from the country’s central bank by €1.1bn to €84.1bn.
The ECB has promised to keep raising the cap on ELA so long as a deal was on the cards, but its patience may soon be tested.
Greek negotiator Euclid Tsakalotos yesterday said the country could not meet its payments to the IMF without extra bailout cash. Greece also owes €3.5bn to the ECB itself on 20 July.
Capital controls are likely without access to ELA. “Capital controls are likely to be needed, and if not this weekend, then certainly next week,” Michael Jacobides of London Business School told City A.M.
“The slap in the face of the capital controls could be the catalyst for [political] changes. My suspicion is that if a deal is struck, it will not be struck by this [Syriza] government.”
A UK government spokesperson said yesterday: “We are continuing to make sure we have the right plans in place and are stepping up preparations, given where discussions have got to.”