Greece will likely exit euro and EU without bailout deal: central bank

[ATHENS] The Greek central bank warned Wednesday that the country could crash out of the eurozone and even the European Union if it fails to reach a bailout deal with international creditors.

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and - most likely - from the European Union." Negotiations over the release of the last 7.2 billion euros in rescue funds from Greece's massive bailout from the International Monetary Fund, European Union and European Central Bank have deadlocked as payment deadlines loom.

Greece faces a 1.6 billion euro payment to the IMF at the end of the month, with another 6.7 billion euros due to the ECB in July and August - payments which Greek officials have said the government cannot afford.

Analysts have long warned that a default may set off a chain of events leading to a messy exit from the eurozone, a so-called Grexit, but not the country leaving the European Union.

The Bank of Greece, in its annual report to parliament to lawmakers and the government, said if the country left the eurozone it would lead to a deep recession, dramatic declines in incomes and a spike in unemployment.

"This is why the Bank of Greece firmly believes that striking an agreement with our partners is a historical imperative that we cannot afford to ignore," it said.

"From all the evidence available so far, it seems that a compromise has been reached on the main conditions attached to this agreement and that little ground remains to be covered."

Eurozone finance ministers meet on Thursday and the possibility of an emergency summit of EU leaders to discuss the Greek crisis has also been evoked.

AFP