Greece crisis: What happens next?
As Greece hurtles towards bankruptcy and a potential exit from the euro, we round up the key facts and dates
Published 30/06/2015 | 07:39
First of all, can you fill me in on what's happened over the past 48 hours or so?
A: Sure. The country's officials have been trying to unlock much-needed cash. However, Prime Minister Alexis Tsipras - who heads up the leftist Syriza party - has become increasingly unwilling to bow to the demands of Greece's creditors - including eurozone governments.
On Friday night, he shocked eurozone officials when he announced a referendum to give the Greek people a say over the terms of a bailout deal proposed by the EU and IMF. The referendum will take place on Sunday, July 5.
Later he Mr Tsipras accused the ECB of attempting to "blackmail" Greeks by withholding emergency funding that the country desperately needs.
In response, the Greek government on Monday imposed temporary capital controls. That's finance speak for shutting down banks and limiting banking transactions to keep money from flowing out of the system. Withdrawals from cash machines are limited to €60 a day. The government has also suspended trading on its stock market.
Greece's bailout officially expires on June 30. The country must also repay a €1.6bn IMF debt due on the same day.
Given that the referendum on the bailout deal proposed by the creditors won't be held until next Sunday, the Greek government looks set to default on that debt.
Q: How much does Greece owe?
A: Greece owes money to a number of countries and organisations following two bailouts - one in 2010 and another in 2012. The bailout funds totalled €220bn, most of which hasn't been be paid back.
Greece owes around €56bn to Germany, €42bn to France, €37bn to Italy, and €25bn to Spain.
The Greek government also owes private investors in the country around €39bn, and another €120bn to institutions including Greek banks.
Q: What does it owe in the next month?
A: On Tuesday, June 30, a €1.6bn debt is due to be paid back to International Monetary Fund (IMF). Greece also owes €3.5bn to the European Central Bank, due later in the month. It also needs to pay around €2bn in public sector salaries and pensions.
Q: What happens if Greece can't pay its bills?
A: If Greece misses the June 30 payment, the IMF won't be able to provide any more financial assistance until the country pays off its debts, according to the head of the Fund, Christine Lagarde. However, Greece will still remain a member of the IMF - at least for two years, at which point it could be forced out. Ms Lagarde says negotiations could be revived if Greek voters show they want to stay in the eurozone.
However, missing the ECB payment due on July 20 is potentially more serious. This would probably freeze emergency liquidity to Greek banks, say analysts. It could be catastrophic as Greece's banking system is being kept alive by emergency money from the ECB - which has pumped in nearly €89bn since February.
Q: What next?
A: Whether Greece stays in the euro or not, the country is bankrupt in all but name.
Greece is now careering down a path of a disorderly exit from the eurozone, which could result in the country scrapping the euro and using an alternative currency as early as July.
"Public sector workers and pensioners might well have to be paid with IOUs as soon as end-July," says Chris Scicluna, head of economic research at Daiwa Capital Markets.
The referendum on July 5 will allow Greek voters to say whether they are willing to accept further tough austerity measures in exchange for more money from creditors. If they say No, Greece could leave the euro.
The worry is that a 'Grexit' could spook financial markets across the eurozone and that weaker members of the currency union could also end up leaving too. Will the euro still exist in a year's time?
Q: What are the key dates?
June 30: €1.6bn payment owed to IMF
June 30: €2bn owed to Greek public sector workers and pensioners
July 5: Greek referendum on whether to accept austerity measures
July 20: €3.5bn owed to the ECB