Govt plays its last card in Frankfurt: ECB liquidity or credit crunch

Greek Deputy PM Giannis Dragasakis meets with ECB Chief Mario Draghi in Frankfurt on Tuesday

The Greek economy is in danger of asphyxiation due to delays in reaching an agreement with Greece’s international creditors while the government is on a race against time to secure the necessary funding. Radical Left Coalition (SYRIZA) government Deputy Prime Minister Giannis Dragasakis is in Frankfurt on Tuesday to meet with European Central Bank (ECB) Chief Mario Draghi.

Dragasakis will discuss the return of liquidity to the Greek economy warning that, otherwise, Greece would not be able to pay off its creditors in May. Furthermore, Dragasakis will stress the government’s willingness to find an agreement, pointing to progress reached in recent days following the government’s change of stand on a number of issues compared to previous weeks. He will  give assurances that the Greek government wants to converge, not clash.

Noteworthy is Prime Minister Alexis Tsipras’ reference to the ECB during a recent interview where he accused Draghi of not keeping promises made on February 20 for a return to normal funding for Greece.

The ECB’s role in the future of the Greek economy is crucial. If the ECB doesn’t increase the limits of T-bonds for the Greek state from 9 bln euros to 15 bln euros that applied until February 18, then money would not suffice for the country’s needs.

Dragasakis will be accompanied by Greek Economic Spokesman Euclid Tsakalotos, not Greek Finance Minister Yanis Varoufakis, during his meeting with Draghi.