Greek official warns of possible euro exit

ATHENS - Reuters

Old drachma coins are displayed for sale at an outdoor market in Athens. AP photo

Greece will have to leave the eurozone if it fails to clinch a deal on a second, 130-billion-euro bailout with its international lenders, a government spokesman said yesterday.

It was an unusually public stark warning from the embattled country, aimed at shoring up domestic support for tough measures and possibly also at the lenders themselves.

“The bailout agreement needs to be signed otherwise we will be out of the markets, out of the euro,” spokesman Pantelis Kapsis told Skai TV. “The situation will be much worse.”

A race against the clock

Greece is racing against the clock to agree with the EU, the International Monetary Fund and private bondholders on the details of the rescue plan before a major bond redemption in March. It risks a default if there is no deal by this date.

Athens and its EU partners have repeatedly ruled out a euro exit, which could drag the bloc even deeper into crisis, and usually avoid saying this is a possible scenario. But top Greek officials, who need to push through unpopular reforms to clinch the bailout deal, have warned over the past few days that a return to the drachma would be “hell” and that the country must stick to austerity to avoid it.