14-04-15

"Debt default does not automatically mean an exit of Greece from the eurozone"

cep economist Matthias Kullas says the slow progress in the negotiations between Greece and its creditors indicate that the government is actually prepared to allow a debt default

Greece urgently needs further financial aid

Greece is preparing itself for declaring a debt default unless it can reach a deal with its international creditors by the end of April, the Financial Times reported citing sources. According to the paper, the government has decided to withhold 2.5 billion euro of payments due to the IMF in May and June if no agreement is struck. However, the Greek government swiftly denied the story. "Greece ... is not preparing for any debt default and the same goes for its lenders," Prime Minister Alexis Tsipras' office said in a statement. cep economist Matthias Kullas, though, argues that the slow progress in the negotiations between Greece and its creditors indicate that the government is actually willing to allow a debt default. “A debt default, however, does not automatically mean an exit of Greece from the eurozone,” Kullas stressed. “Such an exit would only become likely if the ECB is denying the country’s banks further Emergency Liquidity Assistance,” he explained.