official creditor, like the International Monetary Fund, it would not automatically change the country´s rating to a selective default.
Q: What are the key repayment dates?
A: Greece owes the IMF and the European Central Bank 11.5 billion euros in June, July and August.
For Saxo Banque economist Christopher Dembik the crucial repayment is the 3.5 billion euros Athens owes to the ECB and central banks of other eurozone states on July 20.
“Until then I think that Greece has enought to keep the state running at a minimum and reimburse the IMF” smaller amounts due, he said.
Dembik also said Greece will likely be able to continue rolling over what it borrows on the local short-term (3 to 6 months) debt market. Greece has been unable to borrow for long terms since 2010 due to the high rates lenders seek.
If Athens doesn´t reach a deal with the EU and IMF by July 20 then it could find itself defaulting.
Q: What happens if Greece does default?
A: The main risk, according to Castillo and Dembik, is a run on banks by Greeks and investors eager to get their cash out that triggers a collapse of the banking system.
That would have catastrophic consequences for the economy and a society which have already experienced years of recession and high unemployment.
But the economists don´t see a chaotic default taking place because of the particular situation Greece finds itself in: after two bailouts and a writedown on debt held by private investors, some 70 percent of the country´s debt is held by other countries and international institutions. That puts Greece in a far different situation from Argentina, which defaulted in 2001 and is still being hounded in courts by investors.
While that makes the situation somewhat easier for Athens to manage, it doesn´t make its resolution any easier.
Dembik believes a temporary solution could be found by introducing capital controls and pushing back repayment dates on the debt.