Last minute Greek bailout rejected by EU finance ministers

Last minute Greek bailout rejected by EU finance ministers

A last minute appeal by the Greek prime minister has been rejected by eurozone finance ministers, hours before the existing bailout package expired at midnight.

An eleventh hour conference call between Alexis Tsipras and his european counterparts saw the rejection of a third bailout request for €29.1bn (£20.6bn).

As reported by FTAdviser sister publication the Financial Times, some European officials dismissed the appeal out of hand while others speculated it was an attempt to strengthen the prime minister’s hand domestically ahead of Sunday’s referendum on a previous bailout offer.

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Greece also missed a €1.5bn (£1.06bn) payment to the International Monetary Fund which was due last night, which meant that the country went into arrears and will only be able to receive further financing once they are cleared.

Gerry Rice, the IMF’s director of communications, stated: “I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s Executive Board in due course.”

Earlier this week the government imposed capital controls and shut local banks, with many ATM machines subsequently running out of money and some pensioners unable to collect their payments.

For those ex-pat British pensioners, Department for Work and Pensions’ administrators promised to contact those that draw a state or public sector pension from a Greek bank account.

Greek lenders were meanwhile bracing themselves for a crucial meeting of the European Central Bank on today (1 July), with fears that the governing council could raise the amount of collateral required for the emergency loans currently sustaining Greek banks.

The bailout Mr Tsipras proposed was to cover Greece’s needs for the next two years, according to a letter from him obtained by the Financial Times, which made a specific request for debts to be restructured.

Eurozone leaders have refused to discuss debt relief as part of the bailout programme, but openly acknowledged a restructuring could be part of talks on a follow-on programme.

A statement from the Greek prime minister’s office read: “From the first moment, we made clear that the decision to hold a referendum is not the end but the continuation of negotiations for better terms for the Greek people. The Greek government will until the end seek a viable agreement within the euro.”

Yesterday (30 June), FTAdviser reported that chancellor George Osborne warned: “I don’t think anyone should underestimate the impact that a Greek exit from the euro would have on the European economy – and the knock-on effects on us.”

The FTSE fell for the fourth consecutive day yesterday, as the Greek debt crisis continued to rattle European markets, down 1.5 per cent yesterday morning, meaning it has now fallen by over 8 per cent since its recent peak of 7,104 on 27 April 2015.

However, it picked up by 0.69 per cent this morning.