Greece warns of ‘uncontrollable crisis’

Greece’s central bank has warned that a failure to clinch a deal with international creditors on its future funding needs could lead the country into an “uncontrollable crisis,” describing the issue as being of historical significance for the nation.

In its annual monetary report, the Bank of Greece said that based on evidence so far, it seems that a compromise has been reached on the main conditions attached to the lending agreement and that little ground remains to be covered.

“Failure to reach an agreement would ... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country’s exit from the euro area and -most likely- from the European Union,” the report said.

“A manageable debt crisis, as the one that we are currently addressing with the help of our partners, would snowball into an uncontrollable crisis, with great risks for the banking system and financial stability.”

All this would imply deep recession, a dramatic decline in income levels, an exponential rise in unemployment and a collapse of all that the Greek economy has achieved over the years of its EU, and especially its euro area, membership, the report added.

With payment deadlines looming, all eyes are on a meeting of the 19 eurozone countries to take place on Thursday in Luxembourg.

Deepening the tensions, Greek Prime Minister Alexis Tsipras said an EU “fixation” on pension cuts would scupper any hopes of a default-saving agreement.

“There is no room for further cuts without affecting the core of the (pension) system,” he said.

Mr Tsipras said that Athens cannot accept deeper austerity demands from its international creditors - other eurozone countries and the International Monetary Fund - accusing them of trying to humiliate the country and the IMF of having “criminal responsibility” for the country’s current economic woes.

The Bank of Greece backed the government’s position that after years of austerity and the worsening of its economy Greece needs further time to pay back the billions it borrowed.

(Πηγή: theaustralian.com.au)