Employee of Electroniki retail chain Yannis Papageorgiou sets a television at an Electroniki shop in Athens November 27, 2014. Greece has muddled through 20 consecutive months of deflation, or continuously falling consumer prices ? a phenomenon that econo
Employee of Electroniki retail chain Yannis Papageorgiou sets a television at an Electroniki shop in Athens November 27, 2014. Greece has muddled through 20 consecutive months of deflation, or continuously falling consumer prices ? a phenomenon that economists say could soon infect the whole euro zone. In October, prices fell 1.7 percent from a year earlier. Yet alarm over low inflation in other parts of southern Europe does not echo in Greece. Economists say prices in Greece were unreasonably high for a long time. Between 1995 and 2010, consumer prices rose 17 percent more in Greece than in the euro area overall. Lower prices have since made Greek products more attractive. Picture taken November 27, 2014. Reuters/Alkis Konstantinidis

Sending out positive signals, despite a “No” vote against austerity and IMF-EU bail out terms, the Greece government appointed lead bailout negotiator Euclid Tsakalotos as its finance minister. Greece knows well that clock is ticking down to 20 July deadline and it has to repay $3.5billion to the European Central Bank or face very bad consequences.

Many see this as the final deadline for Greece and any default in it would be catastrophic in terms of huge consequences than what it entailed in the default to the IMF. If Greece defaults to the ECB, the Frankfurt based institution will switch off all life support for Greek banks and hasten their collapse. Also Greece will be forced out of euro and ties with the rest of Europe could go from bad to worse.

Brussels Meet

Right now, both Greece and the eurozone are making last ditch efforts for an urgently needed bailout deal, by Tuesday. All the important leaders, finance ministers of EU are assembling in Brussels. For Greece, this is the last chance to propose a reform plan that may kick start a new aid package, reports The Guardian.

Greek prime minister Alexis Tsipras had telephonic talks with the heads of the IMF and ECB. He told ECB boss Mario Draghi that capital controls in Greece need to be lifted but Christine Lagarde, IMF chief said more funds are impossible as Athens is in arrears.

However, EU leaders are awaiting realistic proposals from Greece. But ECB has said it will be keeping the level of emergency credit to Greek banks unchanged, implying that the banks will remain under pressure in coping with demand for cash withdrawals. The ECB made clear that more credit "can only be provided against sufficient collateral." It also said, collaterals have been weakened by the worsening financial situation in Greece. The ECB is also watching the situation in the financial markets and is gearing up to use all measures to keep the 19-nation euro zone stable.

Top leaders of Germany and France said despite Greece's vote against the terms of an international bailout, door is still open for negotiations with the Greek government to find a way out to keep the country in the eurozone. German Chancellor Angela Merkel affirmed the importance of Greece taking "responsibility" for reforming its economy, while French President Francois Hollande urged a show of "solidarity" with Greece. They met in Paris on Monday and set the tone for an emergency summit in Brussels among the euro zone's 19 national leaders.

Greek Parleys

A statement from the Greek officials also showed its government’s earnestness to wriggle out of the crisis as it is "moving immediately to reach a deal with creditors as soon as possible" to stave off the impending economic collapse. Government spokesman Gabriel Sakellaridis said Greek Prime Minister Alexis Tsipras has sought support from all political party leaders, as the government is "fully aware of how crucial the situation is."

Tsipras met party leaders a day after the “No” vote that out-rightly rejected proposals by creditors for more austerity measures in exchange for bail out money. Sakellaridis said the people's message cannot be ignored that viable deal must be fair to the poor and deal with Greece's debt issue while pumping liquidity into the ailing banks.

(For feedback/comments, contact the writer at k.kumar@ibtimes.com.au)

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