Prime Minister of Greece Lucas Papademos said during a meeting with business people and union leaders that Greece will risk a possible disorderly default in March if the government will not get a new portion of money from international lenders, informs Bloomberg. “In mid-January, we will begin talks with the troika (EU, IMF and World Bank) on a credible economic plan for the period 2012-2015”, Papademos said. “Implementation of a debt reduction agreement and to continue funding the country depend on this meeting. Without this funding agreement with the Troika and later financing, Greece will face an immediate risk of disorderly default”.
Prime Minister’s statements came after a day after the Greek government spokesman, Pantelis Kapsis said that, without the funding coming from the troika, Greece could leave the euro zone. “External Financing Agreement has to be signed, otherwise we will leave the market, we will leave the euro area. The situation will be much harder”, said Pantelis Kapsis for a television station. It is possible that all these warnings aim to attract popular support for austerity measures implemented by the government and possibly international creditors.
Greece is trying to quickly reach an agreement with IMF, European Commission and private owners of bonds regarding the details of the external financing agreement. The Greek Government has the following significant debt maturity in March, venturing into insolvency if it will not get an external loan by then. Athens and Brussels have repeatedly rejected the option of excluding Greece from the euro area, an event that could worsen sovereign debt crisis of the euro zone. The high exposure of large European banks in Greece would make a serious default of the country to hit the banking system, involving serious implications for Europe’s economy.
Greek and EU officials have so far avoided to expose the scenario of Greece exiting the European monetary union. Several Greek officials have warned in recent days that the return to the drachma would be “hell” for the country.
