Friday 30 September 2016

Greece crisis: Greeks dismiss report on preparing IOUs to pay state wages, pensions

Karolina Tagaris

Published 08/07/2015 | 02:30

Greek Prime Minister Alexis Tsipras arrives to address the European Parliament in Strasbourg, France, July 8, 2015. Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin. REUTERS/Vincent Kessler
Greek Prime Minister Alexis Tsipras arrives to address the European Parliament in Strasbourg, France, July 8, 2015. Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin. REUTERS/Vincent Kessler
Greek Finance Minister Euclid Tsakalotos waits for the start of the meeting of eurozone finance ministers in Brussels. Photo: AP
Members of the European Parliament hold placards which reads "No - Freedom to Greece" ahead of the speech of Greek Prime Minister Alexis Tsipras at the European Parliament in Strasbourg, France, July 8, 2015. Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin. REUTERS/Vincent Kessler
A pensioner waits outside a branch of the National Bank to receive part of his pension in Athens yesterday
A pensioner exits a National Bank branch after receiving part of his pension in Athens, Greece July 8, 2015. Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin. REUTERS/Alkis Konstantinidis
People stand in a queue to enter a bank for limited services, as the front page of newspaper depicting the Greek Prime Minister Alexis Tsipras reading ''Time runs out for a solution before catastrophe'', in Athens. Photo: AP
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(L-R) Dutch Prime Minister Mark Rutte, German Chancellor Angela Merkel, Greek Prime Minister Alexis Tsipras (standing C), Austrian Chancellor Werner Faymann (rear, in red tie), and European Commission President Jean Claude Juncker take part in a euro zone EU leaders emergency summit on the situation in Greece, in Brussels, Belgium, July 7, 2015. Tsipras launched a desperate bid to win fresh aid from sceptical creditors at an emergency euro zone summit on Tuesday, before his country's banks run out of money. REUTERS/Yves Herman
Greek prime minister Alexis Tsipras has addressed the European Parliament (AP)
Greek Prime Minister Alexis Tsipras (L) talks with European Central Bank President Mario Draghi during a euro zone EU leaders emergency summit on the situation in Greece in Brussels, Belgium, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yves Herman
People queue at an ATM to withdraw cash in Athens on July 7, 2015. European Commission head Jean-Claude Juncker said that he was against an exit by Greece from the euro, even though Greeks massively rejected bailout terms in a referendum this weekend
Newly-appointed Finance Minister Euclid Tsakalotos (R) and outgoing Yannis Varoufakis embrace at the Finance Ministry after a handover ceremony in Athens
Donations of cash are counted following a collection for the Greek Solidarity Campaign, during a rally in support of Greece at the TUC's Congress House, in London, Britain, July 6, 2015. REUTERS/Peter Nicholls
(L-R) German Chancellor Angela Merkel, Greek Prime Minister Alexis Tsipras, Austrian Chancellor Werner Faymann, European Central Bank President Mario Draghi and European Commission President Jean Claude Juncker take part in a euro zone EU leaders emergency summit on the situation in Greece in Brussels, Belgium, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yves Herman
A tourist takes a picture outside the Greek Central Bank
Taoiseach Enda Kenny speaks with British Prime Minister David Cameron during a round table meeting at the EU summit in Brussels
A pensioner waits outside a branch of the National Bank to receive part of his pension in Athens, Greece, July 7, 2015. Greece faces a last chance to stay in the euro zone on Tuesday when Prime Minister Alexis Tsipras puts proposals to an emergency euro zone summit after Greek voters resoundingly rejected the austerity terms of a defunct bailout. REUTERS/Yannis Behrakis
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Greece's finance ministry has dismissed a newspaper report that the country was preparing to issue a second currency to pay state pensions and wages and the end of the July.

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Citing unidentified sources, Kathimerini newspaper reported that Greece's General Accounting Office was preparing issuing IOUs, known as warrants, to pay the wages and pensions of state workers at the end of the month if there was no deal between Greece and its lenders by then.

A supporter of the No vote waves a Greek flag in front of the parliament after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Emilio Morenatti)
A supporter of the No vote waves a Greek flag in front of the parliament after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Emilio Morenatti)
Supporters of the No vote chant slogans after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Petros Giannakouris)
Supporters of the No vote celebrate after the results of the referendum in the northern Greek port city of Thessaloniki, Sunday, July 5, 2015. (AP Photo/Giannis Papanikos)
A riot police detains a youth during minor clashes in central Athens, Greece early July 6, 2015. REUTERS/Marko Djurica
"No" supporters shout slogans and wave Greek national flags during celebrations following a referendum in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
Supporters of the No vote celebrate after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Petr David Josek)
"No" supporters shout slogans during celebrations after a referendum in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
"No" supporters wave Greek national flags during celebrations in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
"No" supporters shout slogans during celebrations following a referendum in front of the parliament in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
"No" supporters shout slogans and wave Greek national flags during celebrations after a referendum in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
Masked youth walk along a street during minor clashes in central Athens, Greece late July 5, 2015. REUTERS/Marko Djurica
"No" supporters shout slogans and wave Greek national flags during celebrations in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
Riot police detain masked youth during minor clashes in central Athens, Greece early July 6, 2015. REUTERS/Marko Djurica
"No" supporters wave Greek national flags on the main Constitution (Syntagma) square in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis
A "No" supporter waves an "Estelada" (Catalonian separatist flag) in Thessaloniki, Greece July 5, 2015. REUTERS/Alexandros Avramidis
Supporters of the ruling Syriza party celebrate their victory in a referendum by the parliament in Athens, Greece July 5, 2015. REUTERS/Dimitris Michalakis
Supporters of the No vote celebrate after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. (AP Photo/Emilio Morenatti)
A supporter of the No vote shouts slogans after the results of the referendum in the northern Greek port city of Thessaloniki, Sunday, July 5, 2015. (AP Photo/Giannis Papanikos)
"No" supporters wave Greek flags by the parliament in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis
A "No" supporter waves a Greek flag by the parliament in Athens, Greece July 5, 2015.REUTERS/Yannis Behrakis
A supporter of the No vote shouts slogans after the results of the referendum in the northern Greek port city of Thessaloniki, Sunday, July 5, 2015. (AP Photo/Giannis Papanikos)
A "No" supporter waves a Greek flag by the parliament in Athens, Greece July 5, 2015. REUTERS/Yannis Behrakis

"The report is totally baseless. Such reports are directed against the country and considered dangerous at a time when negotiations with creditors partners are at a crucial point," the finance ministry said in a statement.

Read more here: Greece Crisis: Tsipras issues plea for resultion which will offer 'light at the end of tunnel'  

Greek Prime Minister Alexis Tsipras, who will address the European Parliament today, won a commitment to seek a last-minute rescue at an emergency eurozone summit yesterday, before his country's banks run out of money.

Italian Prime Minister Matteo Renzi told reporters that EU leaders would hold a further summit on Sunday to approve a plan to aid Greece if creditor institutions are satisfied in the meantime with a Greek loan application and reform commitments.

"The ball is in Greece's court," Renzi said. "Next Sunday the final meeting will take place on Greece."

German Chancellor Angela Merkel, who arrived in Brussels saying there was still no basis for reopening negotiations with Athens, changed her tune in the room and was actively involved in efforts to find a last-ditch solution, sources said.

"It is not a matter of weeks but of a few days" to save Greece from collapse, Ms Merkel told reporters on arrival.

Read more: Department of Foreign Affairs may send euros for Irish tourists

With Greek banks down to their last few days of cash and the European Central Bank tightening the noose on their funding, Mr Tsipras tried to convince the eurozone's other 18 leaders to authorise a new loan swiftly.

People familiar with Greece's financial system said the banks could start running out of money within two days unless there was an international rescue.

However, eurozone sources in Brussels said ECB President Mario Draghi had assured finance ministers that the central bank would keep Greek lenders afloat this week as long as negotiations were under way.

Ms Merkel and French President Francois Hollande worked together on a plan to save Greece from plunging into economic turmoil and possibly having to ditch the euro. This involved a medium-term conditional programme and a short-term interim financing deal for a few months, the sources said.

Read more: 'People are dying ... if Europe turns away from us, it will be like war'

Mr Hollande said: "Greece must make serious, credible proposals. We need speed. It's this week that the decisions have to be taken."

However, a solution still depends on Mr Tsipras putting forward convincing reform proposals and rushing key measures through parliament by the weekend to make Greece's public finances sustainable.

If he does that, bridge financing could be provided by "Greece's friends" and by releasing past ECB profits on Greek bonds, to prevent Athens from missing a crucial €3.5 billion bond redemption to the ECB on July 20, the sources said.

Some of Athens' 18 partners in Europe's common currency vented exasperation at five years of crisis wrangling with Greece. Lithuanian President, Dalia Grybauskaite, complained: "With the Greek government it is every time 'mañana'."

Read more: Borrower and lender, addict and dealer, do battle over money that simply doesn't exist any more

The Lithuanian president, accused the Greeks of "playing poker".

Eurozone finance ministers complained that their new Greek colleague, Euclid Tsakalotos, while more courteous than his abrasive predecessor, Yanis Varoufakis, had brought no new proposals to a preparatory meeting before the summit.

Reuters

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