Is Grexit a bankrupt country

Grexit - When exactly is Greece threatened with bankruptcy?

When exactly is Greece threatened with bankruptcy?

A crucial question in the Greek crisis is when the country will actually be classified as insolvent. Because only this would have a number of consequences.

Until now, June 30th is the fixed date. Then Greece will have to pay the International Monetary Fund (IMF) around 1.6 billion euros. However, other factors may mean that the last day of the current month will not be the decisive date in the Greek drama:

Greek banks: ECB extends emergency loans again

The European Central Bank (ECB) has apparently increased emergency aid for the Greek banks. This was reported by various news agencies, citing banking circles. Previously, it had been heard from financial circles that the Greek central bank had asked for an increase in emergency loans (ELA) of more than 3 billion euros. The Greek banks are dependent on the emergency aid, because there is still no sign of an agreement in the debt dispute between the Greek government and its donors.

The situation of the Greek banks is becoming more and more precarious. Fearing Athens bankruptcy, consumers and businesses are withdrawing a lot of money from their bank accounts to be transferred abroad or to be hoarded as cash. The banks then lack this money in their day-to-day business. (SDA)

1 What do the rating agencies say about bankruptcy?

The major rating agencies such as S&P and Moody's have already stated that they would not classify a payment default vis-à-vis the IMF as a “default” for Greece. The reason: The rating agencies tend to look at the due dates vis-à-vis private creditors - and in the case of Greece these are only due in the distant future.

2 The International Monetary Fund has clear rules in the event of a delay

IMF boss Christine Lagarde stressed on Thursday that there would be no further payment default for Greece. But nobody expects a “default” ruling by the IMF - rather, first of all, a warning letter from the organization to Athens asking them to finally pay. But this would initially have no legal consequences.

3 The Euro Rescue Fund (EFSF) could demand repayment

If the repayments to the IMF fail, the EFSF will also start a default procedure, although the Greeks will not have to repay the EFSF's billion-euro loans until 2023. The EFSF could then theoretically demand immediate repayment of the loan of 130.9 billion euros - but will not do so according to all expectations. It is more likely that a reservation of rights (so-called "reservation of rights") will be entered, with which the EFSF makes it clear that it will not waive the repayment of the loan.

4 The European Central Bank (ECB) will wait until July 20th

The ECB is considered to be the crucial switch point for a complete insolvency. On July 20, Greece will have to pay around 3.6 billion from previous borrowings
Pay back euros. Experts expect that the ECB will inevitably have to stop its ongoing liquidity aid only if these are not served. If Greece did not make a payment to the IMF, the ECB could initially remain in a difficult gray area: Without a “default” it would not necessarily have to re-evaluate all Greek bonds - those in its own possession and those with Greek banks. This creates a certain amount of leeway for the bank supervisors to initially continue to classify the Greek banks as liquid. This in turn would be a prerequisite for the ECB to continue to pay the so-called ELA as liquidity aid to Greek banks. After a payment default on July 20, this would no longer be legally possible. (sda)