After unsuccessful negotiations at the level of finance ministers, the head of the European Council, Donald Tusk, convenes an extraordinary EU summit. European leaders will discuss how to prevent Greece from defaulting

Head of the European Council Donald Tusk (Photo: REUTERS 2015)

European leaders will hold an extraordinary meeting in Brussels on Monday, June 22, to discuss Greece's debt problem, Bloomberg reports . The summit was called by European Council President Donald Tusk after Eurogroup finance ministers failed to reach an agreement at talks in Luxembourg on Thursday.

“The time has come to urgently discuss the situation in Greece at the highest political level,” he said. The summit will begin at 7 pm local time (20:00 Moscow time).

Four-hour negotiations in Luxembourg at the level of the Council of Finance Ministers of the Eurogroup ended in nothing, notes Bloomberg : the parties could not find a way out of the impasse in which Greece found itself, which faces default if it does not pay about €1.5 billion on the IMF loan by June 30.

German Finance Minister Wolfgang Schaeuble, like other ministers, did not comment on the negotiations. However, the head of the International Monetary Fund, Christine Lagarde, said that Greece would not be given a grace period or deferment for the June payments. According to her, if Greece does not pay about €1.5 billion, it will automatically be considered a default. “But I hope that’s not the case, I really hope so,” she said.

The negotiations in Luxembourg were preceded by the annual report of the National Bank of Greece, in which the regulator allowed the country to leave the euro zone. The report states that “failure to reach an agreement would mark the beginning of a painful trend that would first lead to a Greek default and ultimately to the country’s exit from the eurozone and, most likely, from the European Union.”

The regulator emphasized that a manageable debt crisis, which is currently under control, may become uncontrollable, which “carries significant risks for the banking system and financial stability.” The worst-case scenario could result in a deep recession, a sharp drop in household incomes, exponential growth in unemployment and the collapse of the Greek economy, the document says.

The current assistance program for Athens from the European Commission, IMF and ECB in the amount of €245 billion will end on June 30. On the same day, Greece must pay the IMF €1.538 billion. The state will not be able to make the payment if it does not agree on new terms for the provision of loans.

The Troika demands that the Greek authorities tighten the austerity regime in exchange for financial assistance. The radical left government of the country objects to such a measure. In early June, Tsipras said that Athens would not carry out new reforms and payments to the IMF would have to be postponed.

Earlier, the German Bild, citing its sources in official circles, wrote that Greece plans to postpone June payments. At the same time, Greek Economy Minister Georgios Stafakis stated that the country has the funds to make payments.

The European Union announced an emergency summit