Wednesday

28th Sep 2022

Greece risks default in mid-May, S&P warns

  • Greece faces insolvency next month, Standard & Poor's said Wednesday (Photo: Travel Aficionado)

Greece will be forced to default on its debts if a deal with its EU creditors is not reached by mid-May, a leading credit rating agency said on Wednesday (15 April).

Standard & Poor's downgraded Greece’s further into junk territory, from B- to CCC+, with a negative outlook, stating that “without deep economic reform or further relief, we expect Greece's debt and other financial commitments will be unsustainable".

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“If the stalemate between Greece and its official lenders is not resolved before the middle of May, there might not be enough time for the Greek parliament to enact whatever conditions are attached to a revised lending programme,” it added.

The stark warning piles more pressure on Alexis Tsipras’ government to come forward with economic reform plans and a timetable to implement what remains of its bailout plan.

Two months after Tsipras’ left-wing Syriza party was elected on a platform of ending the country’s austerity programme, his government remains at loggerheads with its EU creditors.

Despite Greece presenting a revised economic reform plan at the start of April, its EU creditors have demanded a detailed package of reforms before any further aid is released - €7.2 billion remains in Greece’s bailout plan.

Eurozone ministers will next meet in Riga next Friday, but recent days have seen several ministers play down the prospect of an agreement being reached.

“Given we have lost a lot of time, I am sceptical,” Slovak finance minister Peter Kazimir told reporters after a cabinet meeting on Wednesday.

“Greece is moving ever closer to the abyss”, he added.

A spokeswoman for the German finance ministry warned that “if people are under the impression that aid could be paid out in April, I think this is wrong."

"If there is a reform list, then the next step is a so-called Staff Level Agreement to make formal changes to the conditions of the aid program. This is a complex process and no one in the Eurogroup expects this to be concluded by April 24," she said.

For his part, German finance minister Wolfgang Schaueble, who is attending the International Monetary Fund's annual meeting in Washington, reiterated that “the key to the solution lies in Athens not anywhere else”.

He also indicated that the eurozone would be able to cope with a Greek default or exit from the eurozone, telling reporters that “you can’t see any contagion in markets”.

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