Joseph Muscat allays Maltese Greece default fears

Prime Minister Joseph Muscat has eased fears that Malta would suffer any consequences if Greece were to be declared default, arguing that if the debt-ridden country is declared bankrupt, Maltese banks will not be negatively affected since the banks are not exposed to Greece.

“In the event that Greece goes bust, Malta need not worry because Maltese banks and other financial situations will not suffer any consequences because they are not exposed to Greece,” Muscat said this morning during a telephone interview on One Radio.

On Sunday, Greek lawmakers backed Greek Prime Minister Alexis Tsipras’ call for a referendum on the country’s bailout deal with the country’s international creditors. Tsipras had earlier rejected the proposed reforms after days of high-level talks in Brussels. The proposal would have released €15.5 billion of funding, €1.8bn of which would have been available now. However, that was conditional on Greece carrying out austerity measures.

The rejection means Greece is likely to default on a key €1.6 million repayment to the International Monetary Fund due on June 30 – five days before the holding of the referendum on July 5. Denouncing the referendum announcement as “irresponsible,” Muscat explained that bleak times lie ahead for Greece during the first five days.

“The five days prior to the referendum will be crucial for Greece and humanitarian measures might be expected. However, no one knows what will happen during the first five days as it would have no money. In fact, nearly €250 million have already been withdrawn from ATMs, whereas some banks remained closed,” he said.

Muscat also explained that if Greece were to vote against the austerity measures, it would essentially mean that it does not want to remain in the Eurozone. Nevertheless, any moneys loaned to Greece will have to be repaid, Muscat insisted while allaying fears that Malta would lose the €177 million it loaned to Greece.

“On the other hand, if Greece approves the deal, the Greek government would have to sign an agreement with the European Union and things would return to normal,” Muscat explained.