Tuesday, February 17, 2015

Q & A What is at stake in Greece's bailout negotiations?

German Press Agency (DPA)
February 17, 2015

The new Greek government wants to negotiate an alternative to the country's bailout package, which is coupled with stringent austerity requirements. The European part of its rescue programme ends on February 28.

Without a compromise with other eurozone members, the country's future in the currency bloc remains uncertain.

With Greek leaders opposing a bailout extension, and the eurozone refusing to consider alternatives, here are some possible outcomes of the negotiations.

QUESTION: What happens if Greece exits its bailout on February 28 without a follow-up arrangement?

ANSWER: Athens would forfeit its final European bailout payment of 1.8 billion euros (2.1 billion dollars), as well as 1.9 billion euros in European Central Bank (ECB) profits on Greek bond holdings.

The International Monetary Fund (IMF) also has 3.5 billion euros in aid on hold, pending reform pledges from Athens. Planned IMF disbursements "cannot occur" if Greece does not request a bailout extension, IMF chief Christine Lagarde says.

If the European part of its rescue package expires, Athens could also lose access to 10.9 billion euros worth of extra assistance put aside in 2010 to recapitalize its banking sector.

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