ECB: ECB wants Greece to pay to fund EMU bailout

The European Central Bank (ECB) is asking Greece to cover its EMU bailouts, amid growing fears that Greece is running out of cash and is on the verge of default.

The ECB says it needs the cash as part of the “guarantee mechanism” it agreed with Greece in December 2016.

But the IMF has raised concerns that Greece could be on the brink of default, warning it could cause economic damage and could trigger a contagion to other euro zone countries.

The IMF’s chief economist in Athens, David Lister, said Athens had only a couple of weeks to convince the IMF and other lenders that it was capable of keeping its finances afloat.

“If it doesn’t, we have a very high risk of contagion and we’re going to have a much higher probability of Greece defaulting,” he told Reuters news agency.

In a separate report, the IMF said Greece’s debt burden stood at nearly €10 trillion and that the country was running a “highly risky” risk of default if it ran out of money to meet its EMUNO bailouts.

The government said on Monday it was seeking a €20 billion loan from the European Central Fund (ECF) in order to pay for its EMURO recapitalisation.

The Greek government had previously said it needed €15 billion in loans from the ECB.

The debt restructuring plan is the most serious threat to Greece’s recovery, but it will only be able to address Greece’s economic woes, IMF Managing Director Christine Lagarde told a news conference on Monday.

“We are concerned that Greece will be on a path of insolvency, that Greece’s GDP will be reduced and that its economic activity will be restricted and that there will be a loss of confidence in the Greek economy,” she said.

“Our view is that Greece should be ready to pay its EMECO debt.”

Greece is facing an economic crisis that is worsening with the euro zone debt crisis and a slowing economy, but the IMF says it is unlikely to trigger a Greek default, as the country has already reached the end of its bailout programme.

Lagarde said the IMF’s main concern is that it could trigger contagion if Greece defaults on its EMEU debt.

“This contagion could lead to a contagions in other countries and a risk of financial contagion, and that would have a major impact on global financial markets,” she added.

Greeks finance minister said Greece could run out of capital in next couple of days, IMF sources said on Sunday.

Giannis Tsoukalis said in a televised interview with the Athens-based Ekathimerini newspaper that the government could not pay EMEU bondholders at the end, and he said the government was considering a payment plan to the ECB, which has pledged to repay all the debt by November.

“But we cannot pay these bonds, we are not able to pay them, and we are in danger of running out,” he said.

Goureps government has not yet released a statement on the Greek debt crisis.

In late November, Tsoukals statement was followed by an ECB statement that called on Greece to “resolve its outstanding EMEU and non-EMEU debt obligations” in a joint statement.

In December, the ECB announced a €6.6 billion aid package to Greece, with the bulk of the funds coming from the central bank’s “European Stability Mechanism” – an emergency liquidity injection.

Greek Prime Minister Antonis Samaras, who has said the country needs to repay EMEU bonds, said the deal with the ECB is “a very good one”.

“This is a good first step towards a better agreement,” he tweeted on Sunday, referring to the loan.