EU calls emergency summit as Greek deadlock deepens.
‘IT WILL BE IN DAFAULT will be in default … ON JULY 1’
ATHENS/LUXEMBOURG • Eurozone leaders will hold an emergency summit on Monday to try to avert a Greek default after bank withdrawals accelerated as Athens and its international creditors remain deadlocked over a debt deal.
Finance ministers of the 19-nation currency bloc failed to make any breakthrough on a cash-for-reforms agreement at talks in Luxembourg on Thursday, just 12 days before Greece must make a crucial debt repayment to the International Monetary Fund.
“Regrettably ... too little progress has been made. No agreement is in sight,” Jeroen Dijsselbloem, chairman of the Eurogroup, told a news conference. Ministers sent a strong signal that it is up to Greece to make new proposals, he said.
The European Central Bank warned at the meeting that it was not sure if Greek banks, which have been suffering large daily deposit outflows, would be able to open on Monday, officials with knowledge of the talks said.
Greek savers have withdrawn about 2-billion euros from banks over the past three days, with outflows accelerating rapidly since talks between the government and its creditors collapsed on the weekend, banking sources told Reuters.
Officials with knowledge of the discussions, which took place at a closed-door meeting of the eurozone finance ministers and the European Central Bank and International Monetary Fund, said that the deposit outflow issue was the only thing mentioned by ECB President Mario Draghi during his intervention.
Two officials said that during the meeting, Dijsselbloem asked ECB Executive Board member Benoit Coeure if Greek banks would be able to open on Friday.
Coeure is said to have answered: “Tomorrow, yes. Monday, I don’t know.”
Dijsselbloem, asked at a news conference after the meeting about the pace of deposit outflows in Greece, said:
“I cannot confirm those figures, but it is certainly worrying. If people are taking their money out of the banks, they are very worried about what the future might bring.
European Council president Donald Tusk said in a statement he had summoned heads of state and government of the eurozone to meet in Brussels on Monday.
“It is time to urgently discuss the situation of Greece at the highest political level,” Tusk said.
Dijsselbloem said if there is a lastminute deal next week, there would have to be some extension of the current bailout to allow time for disbursement.
The IMF dashed any hope that Athens could avert default if it fails to repay a 1.6-billion euro ($2.2-billion) loan by the end of June, piling pressure on Prime Minister Alexis Tsipras, who shows no sign of yielding to the lenders.
If deposit flight continues to outpace ELA, it could force Greece to impose capital controls, as Cyprus did in 2013, to ration cash withdrawals and stop money fleeing the country.
A finance ministry spokesman declined comment on the latest capital outflows. A government spokesman said on television late on Wednesday there was no plan to introduce controls.
Tsipras, elected on a promise to end austerity, is demanding a “political level” bargain in which European creditors promise Greece debt relief before he will make any more concessions. But the deposit flight and revenue slump may force him to climb down, with the Greek central bank warning this week of economic catastrophe if Greece defaults and leaves the eurozone.
IMF boss Christine Lagarde closed one of Greece’s last potential escape hatches, declaring that the global lender would consider Athens in default if it misses the June payment, despite reports there might be some leeway.
“It will be in default, it will be in arrears vis-a-vis the IMF on July 1, but I hope it is not the case, I really do,” Lagarde told reporters in Luxembourg. “There is no grace period or two-month delay, as I have seen here and there,” she said.