Readers like you keep news free for everyone.

More than 5,000 readers have already pitched in to keep free access to The Journal.

For the price of one cup of coffee each week you can help keep paywalls away.

Support us today
Not now
Sunday 1 October 2023 Dublin: 17°C
Virginia Mayo/AP Lucas Papademos's government will have to leave the euro if it cannot finalise a deal on writing off some debts, a spokesman says.
# Greece
Greece: If we can't finalise second bailout, we'll have to leave the euro
The Greek government warns that talks to finalise a default on some sovereign bonds have the euro’s future at stake.

THE GREEK GOVERNMENT has warned that the country will almost certainly have to leave the euro if talks on securing its second bailout – which will include a major write-down of its national debt – do not result in a deal.

The second €130 billion bailout, agreed in principle last October, requires Greek bondholders to accept a 50 per cent ‘haircut’ on the value of their investment.

This is so that its mountain of debt – which is the largest in the eurozone, relative to the size of the Greek economy – can be brought under control, though it would remain high.

Talks between Greece and its creditors – who could risk being left with nothing if Greece was to default completely – are continuing, but today a government spokesperson underlined the urgency of the talks.

“This famous loan agreement must be signed, otherwise we are outside the markets, out of the euro and things will become much worse,” government spokesman Pantelis Kapsis told Skai TV.

Kapsis added that further austerity packages could be required in order to rein in government spending:

We will see what the shortfall is and it is very likely that measures will be required [...] I also don’t believe it is easy to impose new taxes, but what does cutting spending mean? To close down the public sector? There is no easy solution.

The talks are hastened by the relatively short tenure of the new prime minister Lucas Papademos, whose five-month tenure is due to expire in April.

The clock is also ticking because Greece is due to repay a €14.4 billion bond at the end of March – an obligation it cannot afford to meet unless it secures the €130 billion in new funds.

Separately today, a spokesman for the prime minister of Lithuania said the country remained determined to adopt the euro by 2014 – after its president shared concerns that the 2014 deadline was not realistic.

“The most important thing are stable finances [to meet the standards laid down by the EU] and the prime minister is sure that our country will meet them,” the spokesman said.

“We can only hope that EU will solve the problems of common currency by that time,” he added.

Additional reporting by AP

Your Voice
Readers Comments
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.