Greek and German Leaders To Meet after Concerns Grow Over Greek Cash Problems

greece-economyGreek Prime Minister Alexis Tsipras is meeting on Monday for talks with German Chancellor Angela Merkel in Berlin as Athens is racing to come up with more short term cash while struggling to adopt a list of self-imposed austerity measures that Greece must undergo to meet the demands of their international creditors.

The Financial Times reported on Sunday that Greek Prime Minister Alexis Tsipras warned German Chancellor Merkel in a March 15th letter that it will be “impossible” for Greece to service their debt obligations in the approaching weeks if the EU fails to distribute any short-term financial assistance to the country.

Tsipras wrote in his letter that Athens may have to choose between meeting debt obligation and paying pensions and wages for Greeks.

Tsipras was unsuccessful in securing short term funding last week at an EU Summit attended by German Chancellor Merkel and ECB President Mario Draghi.

Last month, Athens received a 4 month bailout extension after Greece’s far left government waited until the 11th hour to request a formal bailout due to their reluctance to adopt austerity reforms.

The request from Athens finally arrived after talk about capital controls on Greece’s fragile banks sparked large cash outflows by Greeks.

Despite receiving their bailout extension, Athens still needs an estimated €1.5 billion to meet its financial obligations for March and €2 billion for April.

German newspaper Frankfurter Allgemeine Sonntagszeitung reported on Sunday that Athens is only able to fund salaries for government employees through the second week of April.

Greece’s debts are outsized compared to the debts in other wealthier euro-area member countries.

Greece’s debt to GDP is 175 percent, a level that is unsustainable over the long term.

Since 2010 Greece has received 2 bailouts totaling €240 billion.

-Johnathan Schweitzer

 

 

 

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