Finnish Finance Minister Alexander Stubb says that Greece is not leaving the Euro, but that other members of the single currency are preparing to deal with the country’s possible insolvency after talks broke down over extending a bailout past Tuesday.
Greece will now vote on the last offer made by international lenders in a referendum scheduled for next Sunday.
"Greece hasn’t left and isn’t leaving the Euro, but of course we speculated and went through everything around Greece drifting into insolvency," said Stubb as he left the Eurogroup meeting (of finance ministers from Eurozone countries) on Saturday. "We’ll see over the next few days."
On Saturday Eurogroup President Jeroen Djisselbloem said that the EU would use all available measures, including bailout funds, to ensure the stability of the euro area.
Default on Tuesday?
Stubb has attended 10 Eurogroup summits in Brussels over the last ten days to discuss an extension to Greece’s bailout programme. The country needs new funds to make a 1.6 billion euro payment to the International Monetary Fund (IMF) on Tuesday.
However it could not agree the conditions attached by the trio of international lenders who have been lending Greece money so that it could service existing debts, and may now struggle to make that payment. The Greeks were willing to implement 8 billion euros of austerity and make some pension reforms, but the measures were mostly tax rises the IMF believed would worsen Greece’s recession.
As the parties moved further apart, Greek Prime Minister Alexis Tsipras called a referendum on the lenders’ offer for 5 July.
However, the current bailout package runs out on 30 June, and the Eurogroup has rejected a short extension of the bailout until after the referendum. That means that Greek banks, which are dependent on support from the European Central Bank (ECB), could run out of money as depositors try to empty their accounts.
