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Eurozone Crisis: Grexit Edges Closer as Markets Brace for Athens Default

By Katie Allen

As eurozone officials prepare for further talks on Greece, investors are sceptical that Athens can agree reforms that will unlock further bailout funds.

Eurozone officials meet for further crunch talks on Greece [1] this week amid warnings that time is running out for the country to avoid defaulting on its debts and being jettisoned from the single-currency bloc.

But investors are increasingly sceptical that a rescue deal can be reached between Greece and its creditors. Financial markets do not expect a breakthrough at that meeting of the so-called Eurogroup – the eurozone’s finance ministers – and focus is already shifting to early May when Greece is scheduled to repay almost €1bn (£700m) to the International Monetary Fund – a sum most experts say Athens will not be able to raise.    (my emphasis)

“Although time is running short, there are clear indications that the Eurogroup meeting in Riga on 24 April might not bring a breakthrough,” said Reinhard Cluse, an economist at the bank UBS.

… While economists appear divided over whether a Greek exit from the eurozone would lead to full-scale break-up of the monetary union, the ECB president, Mario Draghi, has sought to allay such fears.

Draghi said at the IMF’s meetings in Washington over the weekend that financial buffers were sufficient to prevent contagion spreading to other weak economies in the currency union [2]. But he warned that Europe would be entering “uncharted waters” that made the outcome of a default uncertain.

READ all of Katie Allen’s comments from The Guardian [3] here [3].

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