Greece was once again on the verge of financial crisis

The economic situation of Greece is getting worse. Again the Greeks massively withdraw money from their accounts or transferred their savings in foreign banks, and the government is trying to negotiate with foreign creditors on a new tranche. In return, they require new reforms and austerity measures. If the situation is not resolved soon, summer may begin a new round of financial crisis, writes “Газета.Ru”.

Individuals and households of Greece to hastily withdraw money from the accounts. According to Bloomberg, from the beginning of 2017 from the accounts left to 3.6 billion euros. Agency sources say that the supply of banknotes is decreasing day by day. In addition, some Greeks are transferring their funds to foreign banks.

Due to these problems the European Central Bank for the first time in a year and a half made a decision raising the ceiling on liquidity in the framework of emergency aid to Greece (Emergency Liquidity Assistance, ELA).

“The Board of Directors of the ECB on 22 March 2017 no objections against increasing the maximum size of the provision of emergency liquidity to Greek banks to €46.6 billion to 5 April 2017 at the request of the Bank of Greece”, — stated in the message of the Greek Central Bank.

The regulator acknowledged that “increase the ceiling by €0.4 billion, reflects the development of the situation with liquidity in Greek banks, taking into account the flow of deposits of the private sector”.

The Greek government failed to agree with its international creditors on the allocation of the next tranche of aid, as of July 1, the repayment of €7 billion to the International monetary Fund.

The meeting of the 19 Finance Ministers of the Eurozone countries, which was held on 20 March, ended inconclusively. As before, the main differences between Greece and its creditors are, what reforms and in what pace it is necessary to conduct to Athens.

“The Eurogroup underlines the need for additional efforts to complete the report on the progress of reforms. The parties reaffirmed their commitment to this task,” — said in the final statement of the Eurogroup, which is quoted by TASS.

The Minister of Finance of the Greek government Dimitris Tzanakopoulos said that Greece is interested in the soonest achievement of an agreement. “That’s our main goal, so we strive to reach an agreement in April,” he was quoted by Reuters. Informal meeting of Ministers of economy and Finance of the EU will be held in Malta on 7 April.

But that contradiction is resolved so quickly, few people believe, because the agreement had to be reached at the end of last year.

Talks between Greece and its international creditors agree with a lot of stress for more than three months, regularly interrupted due to disagreements on reforms of the labour market, pensions and privatization plan, on which lenders insist.

Analyst at Pantheon Economics Klaus Vistesen sure that now the Greek economy is burdened by the tax control by the EU, it does not receive any benefits of the monetary Union, notes The Business Insider.

“Intractable aspect of Greece is that its economy is too small to cope with the amount of debt that she is asked to pay more,” he told the publication. Among the main problems the analyst has included large pension payments in Greece.
“Although the government of Alexis Tsipras held a series of economic reforms and privatize some industries, Tsipras did not move from the dead point to reduce pensions. They constitute 13.3% of Greece’s GDP — much more than in other countries”, — says Vistisen.

Greece has already cut pension payments to citizens, putting many on the brink of poverty, and to cut costs even more, the government simply does not dare.

Recall that the crisis in Greece stretches back to 2008. During this time, there was one year when GDP came in plus (2014, +0.4 percent). In the past year, according to Eurostat, the growth of the Greek economy was zero. The country’s unemployment rate, though down from the record of 27.5%, but remains the highest in the EU in 2016, its level was 23.5%.