Greece is country in bankruptcy

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From today on, Greece is a country in bankrupt without financial assistance program and the consequences on its economy would be enormous, reports MIA from Athens.

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Athens yesterday failed to pay obligations to the International Monetary Fund worth 1.6 billion euro, to the Bank of Greece worth 472 million euro, which means double-bankruptcy debts to the Fund and the Bank, although IMF did not described the situation with these words.

Consequences of bankruptcy will increase as result of the absence of program that will ensure the smooth functioning of the credit system liquidity through the ECB. The combination of dual bankruptcy with the end of the program of financial assistance faces the Greek government with series of problems, says “Kathimerini”.

First, the non-payment of installments to the IMF will have immediate impact on loans given to Greece by the European Financial Stability Fund (EFSF) worth 141.9 billion euro. IMF loans are linked to those of the EFSF through various clauses, meaning that EU zone now has the right to demand immediate payment of 141.9 billion euro.

Second, non-payment to the IMF and to the Bank of Greece would be terrible for the country in terms of the decisions of the European Central Bank, whose Governing Council is due to meet today.

The country is no longer solvent, nor the banks are, and therefore the ECB cannot longer support the banks that are insolvent, and may require payment of all the 89 billion they lent to Greek banks via emergency liquidity mechanism for ELA.

Third, Greece misses the funds for financial assistance that was supposed to get within second program of financial assistance, totaling 16.3 billion euro.

And fourth, if Greece hope for gradual return of the money markets, it definitely will not happen now. Bankruptcy and the absence of the program for financial assistance are factors that chase investors, concludes “Kathimerini”.