Why did the UK bail out the Greek banks?
Government debt relief has left Greek banks in an even worse financial position than they were before the country’s last bailout, the International Monetary Fund (IMF) has warned.
It said the Greek economy has shrunk by as much as 14% since its first bailout, and the country is in danger of breaching its €240bn ($272bn) bailout agreement.
Greek Prime Minister Alexis Tsipras has accused the International Trade Union Confederation of the International Federation of the Red Cross (IFUC), a union representing Greece’s biggest unions, of inciting a “parliamentary coup”.
Greek Prime Ministers Alexis Tsipsis and Nikos Michaloliakos, pictured, have accused the IFUC of inciting an “unconstitutional coup” against Greece’s bailout deal.
The IFS said it was not “satisfied with the government’s response to the crisis” but welcomed the “efforts by both sides to reach a comprehensive and constructive agreement”.
“There are now more than €300bn of IMF and Eurogroup (European Union) debt relief for Greece.
We believe that this should be accompanied by further measures to support Greece’s economy and financial position,” the IFS wrote.
Greece’s government is currently due to hand over the bulk of its bailout payments to creditors by June.
Greece is also due to repay the IMF a further €1.8bn by September, and another €1bn by the end of December.
The IMF has been demanding the Greek government repay all of its debts by the first of this year.
The debt relief package will be worth around €40bn, or about 3% of Greece’s GDP.
Greece has been running a budget surplus of less than 1% of GDP since 2009.
But since the last bailout in 2015, it has been unable to reach its bailout target of 2% of the countrys GDP.
On Friday, Greece’s parliament voted to suspend the government and allow the country to run a general election for the first time in 18 years.
The vote was narrowly rejected by a margin of 56% to 38%.
Greece’s prime minister, Alexis Tsimras, said on Friday he had decided to resign, saying he would not stand in the next election.
Mr Tsimres had been leading the government since November.
His party has been blamed for the country s crisis by leading economists and international experts.
It has also been accused of taking bribes to secure the country a bailout.
It was forced to borrow at low interest rates for the last three years to cover its debt, which has ballooned to more than 100% of gross domestic product (GDP).
Mr Tsipris said he would leave office after his term expires in 2019.
“I am going to leave office, and I will not stay for longer than that,” he said on Thursday.
Mr Michalolakos called the vote “a coup d’etat” against Mr Tsipsas government.
“The current government of the IAEA, which I joined as a member in 2010, was founded on the basis of the agreement of the IMF,” Mr Michallos said in a statement.
“It was never my intention to take over and destroy the Greek state and to change its economic, political, social and cultural policies.”
The Greek economy shrank by 14% between 2012 and 2014, according to the IAFUC.
Greece was one of the first countries in Europe to accept a bailout from the International Bank for Reconstruction and Development (IBRD), which the IMF signed a €10bn ($13.8b) agreement with in 2014.
The European Union has since bailed out the country.
The Greek government has been under pressure to repay its debt to the IMF and to increase spending to shore up the economy.
But Greek finance minister Evangelos Venizelos, who was prime minister for four months, has been criticised for not fulfilling his pledge to increase public spending and cutting tax.
Greek banks were closed on Friday after the government imposed a 10% haircut on its debt.
The decision came amid the latest financial crisis gripping Greece.
Bank deposits were frozen and bank withdrawals were limited.
“We can’t take credit for the good governance of the Greek banking sector, which is also in a state of distress,” Mr Tsavras said in his address to the country on Thursday night.
“But the crisis has been created by the political system in Greece, which refuses to accept responsibility for its actions.”