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Banks stay closed as Tsipras face pressure to submit a credible blueprint for reforms to creditors

Banks stay closed as Tsipras face pressure to submit a credible blueprint for reforms to creditors

Bank closures have been extend by the Greek government with daily ATM withdrawal limits being set at €60 (£43; $66). The curb was imposed when bailout talks with Greece’s creditors hit a deadlock leading to rushed withdrawals. The European Central Bank made a decision of not increasing its support for the Greek banks till a solution to the debt crisis has been reached- http://www.bbc.com/news/world-europe-33456182 (follow the link for more information).

Meanwhile the Greek Prime Minister, Alexis Tsipras is under pressure to present a blueprint for economic reforms to creditors- http://www.theguardian.com/world/2015/jul/08/greece-crisis-tsipras-under-pressure-to-submit-reform-blueprint-to-creditors (follow the link for more information). Greek government has asked for a third bailout to enable it to pay debts and avoid economic collapse as well as ejection from euro. On Wednesday, the stability mechanism of Europe which is also the monetary rescue fund announced that Greece applied for a third bailout package that will run for 3 years.

So far, Greece has asked for and received two bailouts amounting to almost 240 billion Euros though it needs more. Last week was the end of the second bailout program but Greece missed debt payment to the IMF which made it the first country with a developed economy to miss debt payment to the IMF.

Greece PM, Tsipras says that he will present “credible” reforms plan this Thursday before the Sunday deadline that was set by the European Union to find a reasonable solution to the current debt crisis. The emergency summit scheduled for Sunday will involve 28 members of the EU rather than the 19 countries in the eurozone. Speaking on Wednesday in a fractious debate regarding the debt crisis in European Parliament, Mr. Tsipras criticized the last bailout saying that it made Greece the “austerity laboratory” for the world.

According to Donald Tusk, the President of the European council, this is the most critical moment in eurozone’s history. The Sunday summit comes after the eurzone emergency talks that were held on Tuesday in Brussels failed to come up with a solution to the crisis.

Acute crisis

The debt crisis that began 5 years ago is entering its climatic 5 days. At the moment, much depends on the reforms that Tsipras will submit in exchange for a third bailout. Meanwhile Tsipras sounded defiant in a speech that he made in European parliament saying that Greece will no longer be treated as the “austerity laboratory.”

In Wednesday evening, the Greek finance minister announced that the holiday for the banks has been extended until July 13. On the same Wednesday, the Managing Director for IMF, Christine Lagarde, said that the only solution to the Greek economy is debt restructuring and reforms program. She said that Greek is in an acute crisis that should be addressed promptly and seriously. However, Greek government insists that the country is not facing fuel and food supplies’ threat.

In the meantime, people are engaging in panic buying- http://www.nytimes.com/2015/07/09/world/europe/greeks-spend-droves-afraid-losing-savings-bailout.html?hp&action=click&pgtype=Homepage&module=b-lede-package-region&region=top-news&WT.nav=top-news&_r=0 (follow the link for more information). Most Greeks are concerned that there is more trouble ahead and therefore they are limiting the amount of cash that they withdraw from banks. Many Greeks are using debit cards in purchasing dishwashers, refrigerators, ovens and other tangible assets that will hold their values during the troubled economic times.

Sources

http://www.bbc.com/news/world-europe-33456182

http://www.theguardian.com/world/2015/jul/08/greece-crisis-tsipras-under-pressure-to-submit-reform-blueprint-to-creditors

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