Greece default

Chances of Greece’s default increase Owing to unsuccessful negotiations between the new Greek government and the creditors

Credit rating agencies say that chances of Greece’s default and its exit from the euro bloc increase. International provider of stock market indices S&P downgraded Greece’s credit rating by one notch to “B- “ with a negative outlook.

Standard & Poor’s also added that the country’s financial situation may worsen. Moreover, Moody’s Investors Service placed Greece’s Caa1 government bond rating on review for downgrade due to uncertainty over the Athens’ negotiations with the European partners. The Greek minister of economy says that the country may face financial difficulties in the next month as tax payments dropped. Greece’s citizens delay payments of real estate tax, against which the Syriza party was. Greece needs about €4-5 billion of external financing by June. However, some politicians believe that the country may hold out until May or June.

If Athens announces a default, the country will leave the currency union. The government of Greece is asking the European creditors for a bridge loan by June 2015 and also for the Greek part of the ECB’s profit of €1.9 billion. However, these claims and the idea of debt restructuring or its write-off were declined.

Nevertheless, on February 6 Syriza said it will keep its course. In February the European finance ministers will hold a summit on Greece’s debt problem. However, Brussels insists that the Greece authorities direct an inquiry into extension of the rescue package, which expires on February 2015, as soon as possible.