Greece can survive till summer without EU deal

GMT 22:14 2015 Monday ,16 February

Arab Today, arab today Greece can survive till summer without EU deal

Protester wearing a mask of German Finance Minister Wolfgang Schaeuble
Athens - AFP

Cash-strapped Greece can survive financially until the middle of the year after its EU bailout technically ends on February 28, analysts believe, despite the abrupt failure of talks with its eurozone partners on Monday.
But if Athens fails to broker a deal with its European creditors, there could be long-term damage to its recovery prospects, they warned.
Jeroen Dijsselbloem, the head of the group of nations that use the single European currency, said after the fractious Brussels talks ended in failure Monday that Greece had the rest of the week to officially request an extension to its debt bailout programme, which expires at the end of the month.
The Greek government appears unlikely to do so, because it has rejected the Eurogroup's demands that it continue the bailout, arguing that the attached conditions have plunged the country into poverty.
Speaking before the talks ended, Panagiotis Petrakis, a professor of economic science at Athens University, said: "March is manageable... I do not see major difficulties but protracted negotiations will affect bank liquidity and budget objectives such as growth.
In March, Greece needs to redeem over 4.6 billion euros ($5.2 billion) in maturing short-term treasury bills, but the sum can be covered with equivalent debt issues, notes Natixis analyst Jesus Castillo, a specialist on southern Europe.
Similarly, new treasury bills can also help cover the repayment of around 1.2 billion euros owed to the International Monetary Fund, maturing in March.
"There are reserves available for as long as is required," alternate finance minister Dimitris Mardas told Skai radio on Monday.
However, Greece cannot handle on its own the repayment of 6.7 billion euros of long-term debt maturing in July and August.
"Technically there won't be a problem until the summer. The state treasury will be able to pay salaries and pensions thanks to tax revenue," says Castillo.
After six years in recession, Greece saw a glimmer of growth in 2014 at a rate of 0.8 percent of output.
But the economy contracted again in the final quarter of the year as negotiations stalled with Greece's creditors in a dispute over the viability of this year's budget.
There was also political stalemate in December as parties failed to agree on a presidential candidate, forcing early elections on January 25.
Amid the campaigning, tax payments slackened.
Net state revenue in January was over 900 million euros short of target, the finance ministry said.
The previous government had forecast a growth rate of 2.9 percent this year, but this is now unlikely to be achieved.
The new radical left government has placed its emphasis on helping out thousands of Greek families impoverished by the austerity cuts imposed in the last five years in return for EU-IMF bailout loans.
"There needs to be a political accord to set the basis of negotiations to February 28 as Greece's European peers do not like suspense," says Castillo.
Eurozone finance ministers might well hold an extraordinary meeting ahead of their scheduled meeting on March 9, he adds.
To purchase state treasury bills, Greek banks are drawing on emergency liquidity assistance provided by the European Central Bank.
The ECB last week raised the level of funding available to Greek lenders by 5.0 billion euros to 65 billion euros.
And at a scheduled ECB board meeting on March 18, it could raise this ceiling further, Castillo argues.

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