Greece rejects new loans from EU, IMF as money runs out

Syriza leader Alexis Tsipras greets supporters following victory in the election in Athens on January 25, 2015. The decision by Greece’s anti-austerity government in Athens to refuse fresh EU-IMF loans has set economists guessing how long Greece’s meagre finances can last. AFP PHOTO | LOUISA GOULIAMAKI 

In Summary

• The yield on Greek 10-year bonds now exceeds 11 per cent, an impossible rate for Greece to borrow at today were it to attempt to raise money without EU-IMF protection.

ATHENS, Sunday

The decision by Greece’s anti-austerity government in Athens to refuse fresh EU-IMF loans has set economists guessing how long Greece’s meagre finances can last.

“From what I hear, Greece can barely hold on until February,” Alexandre Delaigue, economics professor at the French military academy Saint-Cyr, told AFP.

The new hard-left government of Prime Minister Alexis Tsipras that took over after the January 25 general election faces a daunting debt repayment schedule this year.

It must repay 9.0 billion euros to the International Monetary Fund this year, including 2.3 billion in February and March, according to BNP Paribas.

There is subsequently another 6.7 billion euros in bonds held by the European Central Bank which must be paid in July and August, and 15 billion euros in short-term debt held by Greek banks owed throughout this year.

Greece’s rejection of new EU-IMF loans, and its insistence on Friday in talking directly to its international creditors without the intervention of lower-level fiscal auditors, has alarmed financial markets.

IMPOSSIBLE RATE

The yield on Greek 10-year bonds now exceeds 11 per cent, an impossible rate for Greece to borrow at today were it to attempt to raise money without EU-IMF protection.

After rebuffing the committee of EU-IMF fiscal auditors known as the ‘troika’, which Finance minister Yanis Varoufakis dismissed as “rotten” and “anti-European”, Greece is asking creditors for time.

“We need time to breathe and create our own medium-term recovery programme, which amongst other things will incorporate the targets of primary balanced budgets and radical reforms to address the issues of tax evasion, corruption and clientelistic policies,” Tsipras said in a statement to Bloomberg.

(AFP)