Greece’s economy unexpectedly returned to growth in the second quarter despite political turmoil and the threat of a Greek euro zone exit, data showed on Thursday.

In a boost for Prime Minister Alexis Tsipras’s leftist government, revised data also showed that Greece posted no growth or decline in economic output in the first quarter instead of a previously reported 0.2 per cent contraction.

That meant the country did not enter into a recession at the start of the year as previously believed – a slide that was expected to have been exacerbated by Tsipras’ hard line against the austerity imposed by international lenders.

Gross domestic product expanded 0.8 per cent from April to June, based on seasonally adjusted flash estimates from statistics service ELSTAT. This was far above a forecast by analysts polled by Reuters of a 0.8 per cent contraction quarter-on-quarter.

No official data was provided on what drove the growth as these are preliminary figures. But analysts said some sectors, such as the tourism mainstay of the economy, had shown ability to withstand the uncertainty stemming from months of deadlocked talks with foreign lenders.

“Some economic activity indicators in the second quarter, including consumption, industrial production and tourism, had shown particular resilience,” said economist Nikos Magginas at National Bank. “This explains the surprising second quarter GDP reading.”

He said the data helped shape a more favourable outlook for the year as a whole, rendering the prospect of an overall  contraction of less than 2 per cent for 2015 “realistic”.

Under the baseline scenario Greek authorities have agreed with international creditors in the new bailout agreement, Greece’s economy is projected to shrink by 2.1 to 2.3 per cent this year.

Greece’s economy emerged from a six-year recession in 2014 but shrank in the final quarter as political upheaval returned.

More recently, and not captured in Thursday’s data, economic activity was sharply hit by the imposition of capital controls and a three-week shutdown of banks starting June 29.

The Greek parliament on Thursday was preparing to approve a new 85 billion euro bailout deal with the European Union that Greece needs to avoid defaulting on a debt repayment next week.

(Reporting by George Georgiopoulos, writing by Deepa Babington Editing by Jeremy Gaunt)

THE DEBTORS ASSOCIATION on Monday published guidelines advising borrowers of their rights and what steps they can take when being squeezed by the banks. The detailed, step-by-step list of guidelines comes days after the Central Bank released its latest data on non-performing loans (NPLs). Between January 2014 and end of March of this year, commercial banks restructured NPLs worth €4.9bn, or 19.2 per cent of NPLs in the entire system. Borrowers, except those falling within the scope of the financial ombudsman laws may, within 14 days of the first bank notice proposing a restructuring plan for their debt, contact the bank and discuss the proposed plan. Should a borrower reject the plan, or the bank fail to come up with any restructuring scheme, then the debtor is entitled to file an appeal with the lender’s dispute resolution committee. Where the borrower has rejected the bank’s restructuring plan, the committee will investigate whether the plan was suitable for the borrower. Appeals to banks’ dispute resolution committees must be submitted within one month of receiving the bank’s response to the borrower’s rejection of the restructuring plan, or one month from the date of receipt of the bank’s decision by which the lender refused to deliver a restructuring plan. Borrowers with outstanding debt up to €350,000 – secured by mortgage – may apply with the financial ombudsman to appoint a mediator, within 14 days of having submitted their financial data to the bank. The whole process – appointment of a mediator, the mediation procedure and the bank’s submission to the borrower of a restructuring proposal, as this arises after the mediation is concluded – may not take more than one month. A bank may not initiate any legal or arbitration proceedings, nor initiate proceedings to sell a mortgaged property by auction, prior to the completion of a mediation procedure. For financial disputes up to €170,000, borrowers who have a complaint against a bank – for example, for illegal charges – may submit their complaint in writing to the bank within 15 days of having been appraised of the issue. The bank notifies the borrower that it has received the complaint within 15 days, and responds to the complaint within three months. If the bank does not respond within this deadline, or if the borrower is not satisfied with the response, he or she is entitled within four months to submit a complaint to the financial ombudsman with the aim of settling the dispute. The ombudsman’s decision will be binding only where both the lender and the debtor have agreed to this. Where debts do not exceed €25,000, a borrower may file a request for debt relief, along with a sworn statement, with the government’s insolvency service. This applies to persons with net monthly income of up to €200 and owning assets worth up to €1000 (not including reasonable living expenses). If the insolvency service is satisfied that the applicant meets the criteria set out under the law, it then issues a certified statement and the borrower will be represented in court for the issuing of a debt relief order. Where a borrower’s total debt is €25,000 and over, the eligible debt is distributed among the various creditors. Once a debt relief order has been issued, the bank may neither continue nor initiate any procedure, legal or otherwise, against a borrower or his/her guarantors, in relation to recouping the eligible debt. Borrowers who are insolvent – are unable to repay all of their debts – and who have not, for three years prior to filing for a personal repayment scheme – had their debt forgiven by a debt relief order, may appoint an insolvency consultant, who will prepare and submit a personal repayment scheme proposal to the creditors. Before this proposal is submitted, the borrower files a request with the insolvency service which, if satisfied that all is in order, will issue a protective certificate, to be used in court for issuing a protective order for the borrower’s assets. The protective order remains in force for 95 days, and while it is in force creditors served with the order may not initiate any legal or court proceedings against the borrower. Next, once the debt validation procedure has been completed, the insolvency consultant calls a meeting of the creditors to examine the proposed personal repayment scheme. Where creditors have rejected the insolvency consultant’s proposal for a debt repayment scheme, and provided that the borrower’s total debts do not exceed €350,000, the borrower may seek a court order forcing the creditors to accept the scheme. This applies where at least one of the creditors has collateralised the borrower’s primary residence to the tune of up to €300,000, and where the borrower’s other total assets are worth €250,000 and less, and the borrower demonstrably has suffered an income reduction of 25 per cent due to the financial crisis. When a personal repayment scheme is in force, and where the market value of the mortgage is equal to or greater than the principal’s debt, the guarantor is released of liability. If the value of the mortgage is less than the debt, the guarantor is liable only for the difference between the property value and the balance of the debt. Creditors may not foreclose on a guarantor’s primary residence as a result of the principal’s failure to meet his or her obligations, unless the guarantor has expressly put up his or her residence as collateral for the debt in question. In addition, a bank may not take any legal action against a guarantor after two years have elapsed since a personal repayment scheme has entered into force. If the debt relief order or personal repayment scheme does not produce a result, borrowers who are completely unable to repay their debts due to the financial crisis, may apply for a court-issued debt waiver, a bankruptcy discharge or an order suspending for six months foreclosure proceedings on a mortgaged primary residence or business premises. Borrowers may at any stage, up until receipt of the first foreclosure notice (‘Type IA’), file a lawsuit against a bank in relation to inflated debt balances or unfair terms of contract. Also, within 30 days of receiving the above-mentioned notice, a debtor is entitled to file an appeal with a district court to set aside the notice, provided certain conditions are met. Within ten days of being served with the ‘Type IB’ foreclosure notice, borrowers may appoint their own property valuer. Once an auction is underway, the reserve price is fixed at 80 per cent of the property’s market value, and the mortgaged property may not be sold below the reserve price. If no sale takes place, the creditor may continue efforts to sell the property, either via another auction or directly, again at a reserve price of 80 per cent, for a period up to three months after the first auction. After the three months have elapsed, the reserve price no longer applies. If the bank fails to sell the property within one year of the first auction, it may buy the property at its market value, or put it up for auction or sell it directly at a reserve price of 50 per cent of the updated market value.

The results of a study concerning the transportation of natural gas from Cyprus’ Aphrodite field to Egypt are expected to be ready within the next few days, according to Energy Minister Giorgos Lakkotrypis.

The study, which started around two months ago will determine the technical and financial elements of installing a natural gas pipeline from Aphrodite (block 12) to the shores of Egypt, either for domestic consumption or for other markets, he said.

The study is being carried out by the Cyprus National Hydrocarbons Company (CNHC) and Egypt’s EGAS.

The next step would be establishing trade agreements that are currently “being negotiated” between the block 12 consortium, CNHC, and EGAS.

In late 2011, US-based Noble Energy announced estimated gross mean resources of 5 Tcf for the Aphrodite gas field.

Noble has a 70 per cent working interest, while Delek Drilling and Avner Oil Exploration each hold 15 per cent stakes.

In the next few days, the ministry will provide feedback while “there are discussions on a corporate level for the sale of natural gas to Egypt with a number of companies,” Lakkotrypis said.

He added that decisions should be expected in the next few months.

Asked whether the sale price is expected to be discussed soon, he said it was a matter that along with other terms such as the funds and credit ratings of the buyer, were of great importance that will be agreed on.

Less than two weeks ago, Egyptian media reported that Egypt completed a feasibility study into natural gas imports from Cyprus and the results were being reviewed by EGAS.

EGAS Chairman Khalid Abdul-Badi told Al-Bosra newspaper that the quantities to be imported amount to roughly 700 mcf/d of gas, and are expected to begin in 2018.

President Nicos Anastasiades plans to call a National Council meeting immediately after the summer break, government spokesman Nicos Christodoulides said on Monday as outrage continued in the political sphere over the property issue.

Christodoulides was speaking after a meeting to brief House speaker and Acting President Yiannakis Omirou on Anastasiades’ instructions. “After the holiday, the president intends to call a meeting of the National Council to inform them on the latest developments,” the spokesman said.

“In relation to the property, I want once again to mention that what has been agreed is the individual’s right to property. I think that is an important development given the [long-standing] Turkish position for a comprehensive exchange of property, thus abolishing the individual’s rights,” he said.

The spokesman was referring to an agreement reached last week between Anastasiades and Turkish Cypriot leader Mustafa Akinci that the rights of all property owners, and current users, would be respected under a settlement, and that a property commission would be created to decide on return, exchange or compensation.

Both leaders have received a lot of flak over the deal during the past week, Akinci because of how Turkish Cypriots living in Greek Cypriot properties would be affected, and Anastasiades, who is being accused of giving up the rights of Greek Cypriots by “equating owners with usurpers”.

UN Special Advister Espen Barth Eide last week tried to dispel concerns by saying the media, particularly the Turkish Cypriot press had misunderstood. Akinci is due to brief the media, the ‘parliament’ and others later this week.

The criticisms continued on the Greek Cypriot side on Monday with DIKO, Citizens Alliance and the Greens all saying that effectively what was being discussed was “the non-return of refugees to their homes”.

“The right of the legal owner is inalienable and cannot be falsified by criteria nor be substituted by compensation or exchange,” DIKO said.

“This attempt, by adding various criteria and joint recognition of alleged rights of illegal users is identical to provisions of the Annan Plan, which the people already rejected,” added the Citizens Alliance. “The displaced, as sole legal owners, should have secured the right to choose how they wish to use their property.”

“Until recently it was the Turks who were undermining the rights of legitimate owners and their heirs and giving those rights to illegal current users. Unfortunately now we hear Greek Cypriot politicians and political parties adopting the Turkish approach,” the Green Party said, referring to support for Anastasiades from ruling DISY and main opposition AKEL.

Omirou also said on Monday that the rightful owner should have the first say in whatever the alternatives were to be provided. “The rights of ownership as laid down in international and European law should be applied,” he said.

Meanwhile the working group on property issues is intensifying its work in a bid to assist the leaders in bridging their respective positions at the negotiating table, the Cyprus News Agency reported.
Separate Greek Cypriot and Turkish Cypriot working groups were established in March 2014.

A source from the Greek Cypriot working group told CNA: “We have started in the last four weeks to have joint meetings with the Turkish Cypriots,” adding that there had also been a joint meeting with the two negotiators, Andreas Mavroyiannis and Ozdil Nami.

The source also said more information should be given to the public so they can understand what is being discussed. “We need to say more on this matter,” said the source.

Mavroyiannis and Nami are continuing their own meetings until August 7, to be followed by a two-week break. They will resume their work during the last week of August with daily meetings aiming to prepare for the September 1 leaders’ meeting.

By Jean Christou

Cyprus will in September proceed with a competitive, non-discriminatory and transparent two-stage procedure to select the single licensee for the Integrated Casino Resort, the government announced on Monday.

The Operations and Casino Control Legislation of 2015 was enacted into law upon its publication in the Official Gazette of the Republic on July 21, 2015, an announcement said.

“In September 2015, the ministry of energy, commerce, industry and tourism shall proceed with a competitive, non-discriminatory and transparent two-stage procedure to select the single licensee for the Integrated Casino Resort.

The “Cyprus Casino Licensing Update” document, outlining a summary of the project and its stated aims and objectives along with an outline of the planned licensing procedure, is published on the ministry’s website  http://www.mcit.gov.cy together with the official text of the Law in Greek and the unofficial translation of the Law in English, the government said.

Earlier this month Parliament approved the creation of a casino resort in Cyprus plus four more so-called satellite establishments, in a move the island hopes would attract more tourism from the region.

The bill was passed with the votes of 29 MPs belonging to ruling DISY, DIKO, and EDEK. Twenty-two lawmakers voted against, including House President Yiannakis Omirou, the former EDEK leader.

The law provides for one casino resort and four satellites. Three would only host gambling machines, while the fourth would also include table games.

Amendments included by parties include a ban on granting credit to players, and that state land will not be used for the construction of the casinos.

Entrance criteria have also been introduced for Cypriot players who would have to secure a special permit after their tax file is checked.

Illegal casino operators would have their proceeds seized on top of possible jail time and a monetary penalty.

Parliament must also be informed of the selection criteria of the bidders,

Obtaining a membership card would depend on a person’s annual income.

The precise details on the income criteria, as well as where and how the cards are to be issued, will be covered by regulations which the government will draft and bring to parliament once it reopens after the summer recess.

It’s understood that a person would need to obtain a certification from Inland Revenue so as to be eligible to apply for a membership card.

The Mall of Cyprus and the Mall of Engomi are to be sold to South Africa based Atterbury Group after an agreement was reached for their sale, PR manager of Shacolas Group Pavlos Pavlou said on Saturday.

The €193m deal concerns the Mall of Cyprus complex which includes the mall, IKEA, ANNEX three and four, and the mall of Engomi.

There is also a provision for the sale of a plot of land next to the mall of Cyprus for €8m, Pavlou said, in total the deal reaches around €202m.

He added the group was to make an announcement next week.

“There are still some procedures and some issues that need to be sorted out that we expect to be completed by Thursday or Friday,” Pavlou told the Cyprus Mail.

Following the transfer, Nicosia’s two popular shopping malls will be managed by Atterbury, Pavlou said, that runs several malls throughout the world.

Atterbury was founded in 1994 in Pretoria, South Africa and its main focus is on developing retail centres and commercial buildings. It runs malls in South Africa, other African countries and in Europe.

It is thought the sale of these assets aims at further reducing Shacolas Group’s loans and increasing the company’s liquidity.

NKS Shacolas Holdings Ltd, was reported last year to be among the Bank of Cyprus’ largest debtors, recorded as owing the bank a total of €315m.

In 2013 Shacolas sold its investment in MTN Cyprus to the MTN Group and last year sold its investment in CTC-ARI Airports Ltd that operates the retail outlets in Larnaca and Paphos airports, and its shares in Cyprus Airports (F&B) Ltd, that operates the Food and Beverage outlets in the Larnaca and Paphos airports.

According to the group’s latest interim report, turnover for the first quarter of 2015 showed a 3.4per cent decrease compared to the same period last year, as well as its gross profit, €18,743,000, a 7.3 per cent decrease compared with last year’s equivalent period.

It adds that the Board of Directors and the Management of the Group, note that despite some general indications of stabilisation and improvement in the economy, careful management and continuous vigilance are required.

Earlier this year plans were submitted to enlarge the Mall of Cyprus by 5,000 square metres at a cost of €25m.

By Evie Andreou

THE Central Bank of Cyprus (CBC) on Friday denied rumours of mishandling in placing the Federal Bank of the Middle East (FBME) under administration and resolution that could cost the taxpayer millions in damages sought by the lender’s owners.

Operations of the Tanzania-based bank’s local branch were taken over by the CBC last year after it was named a “financial institution of primary money-laundering concern” by the US Department of the Treasury.

In a statement, the CBC, in its capacity as Resolution Authority, offered its oft-repeated assurance that “all measures and actions taken to address the situation are based on national and European Union law, and aim to, inter alia, safeguard financial stability, serve the national interest, and protect depositors”.

“Furthermore, the CBC notes that it has undertaken, and continues to undertake, efforts to co-operate with all stakeholders in order to arrive at the optimum solution, as soon as possible, in service of the above aims, always in accordance of legislative provisions,” the CBC said.

To date, FBME shareholders deny the money-laundering allegations and have resorted to the international arbitration court to have the liquidation and resolution orders lifted.

“The CBC regretfully notes that, despite repeated attempts, no spirit of co-operation has been exhibited, either by the bank and affiliated individuals, or by the Tanzania oversight authority, but is instead constantly faced with actions that do not contribute to the right direction,” it said.

“Specifically, the bank and affiliated individuals issue public statements and unbecoming attacks against the CBC and its staff, in complete contrast with banking practices and etiquette.”

But in order to protect the country’s interests, the CBC said, it declines to comment on “particular claims made in press reports, both by the media and the bank itself, since they directly touch on ongoing legal and international arbitration proceedings”.

By Angelos Anastasiou

France and Germany told Greece to come up with serious proposals in order to restart financial aid talks, raising pressure on Prime Minister Alexis Tsipras to compromise a day after his country voted overwhelmingly against more austerity.

After a meeting in Paris, German Chancellor Angela Merkel and French President Francois Hollande said Athens must move quickly if it wants to secure a cash-for-reform deal with international creditors and avoid crashing out of the euro.

Raising the stakes on the Greek leader ahead of a euro-zone summit on Tuesday, the European Central Bank decided to keep a tight grip on funding to Greek banks, which have been closed for more than a week to avoid a massive outflow of money that could lead to their collapse.

The ECB also decided to raise the amount of collateral Greek banks must post for any loans. The move doesn’t affect the lenders right away, but it was a warning shot by the ECB to Greek banks that their fate lies in its hands.

And a German finance ministry official dismissed the idea that Berlin would be willing to concede some debt relief to Athens, a position that Tsipras’ government has long sought.

Still, in a sign that Athens is keen to seek a new deal, Greece’s combative finance minister, Yanis Varoufakis, resigned, apparently under pressure from other euro zone finance ministers who did not want him as a negotiating partner.

Tsipras had earlier promised Merkel that Greece would bring a proposal for a deal to an emergency summit of euro zone leaders on Tuesday, a Greek official said. It was unclear how much it would differ from other proposals rejected in the past.

“The door is open for discussion,” Hollande told reporters, standing next to Merkel after talks at the Elysee Palace.

“It’s now up to the government of Alexis Tsipras to offer serious, credible proposals so that this will can be turned into a programme which gives a long-term perspective, because Greece needs a long-term perspective in the euro zone with stable rules, as the euro zone itself does.”

Hollande stressed that there is not much time left while Merkel urged Greece to put proposals on the table this week.

After the Greek ‘No’ vote, gloomy officials in Brussels and Berlin said a Greek exit from the currency area now looked ever more likely.

But they also said talks to avert it would be easier without Varoufakis, an avowed “erratic Marxist” economist who infuriated fellow euro zone finance ministers with his casual style and indignant lectures. He had campaigned for Sunday’s ‘No’ vote, accusing Greece’ creditors of “terrorism”.

His sacrifice suggested Tsipras was determined to try to reach a last-ditch compromise with European leaders.

Greece’s political leaders, more accustomed to screaming abuse at each other in parliament, issued an unprecedented joint statement after a day of talks at the president’s office backing efforts to reach a deal with creditors.

They called for immediate steps to reopen banks and said any deal must address debt sustainability – code for reducing Athens’ crushing debt – but gave no hint of concessions from the Greek side towards its creditors’ demands for deep spending cuts and far-reaching reforms of pensions and labour markets.

The chief negotiator in aid talks with international creditors, Euclid Tsakalotos, a soft-spoken academic economist, was appointed finance minister.

To win any new deal, Greece will have to overcome deep distrust among partners, above all Germany, Greece’s biggest creditor and the EU’s biggest economy, where public opinion has hardened in favour of cutting Greece loose from the euro.

While jubilant Greeks celebrated their national gesture of defiance late into the night, there was gloom in Brussels.

European Commission Vice-President Valdis Dombrovskis said there was no easy way out of the crisis and the referendum result had widened the gap between Greece and other euro zone countries.

An EU source said barring some major Greek concession, euro zone leaders were more likely to discuss on Tuesday how to cope with a Greek exit, and how to reinforce the remaining currency union, than any new aid programme for Athens.

The Greek bank association chief said an eight-day-old bank closure that has crippled the economy will continue on Tuesday and Wednesday and the daily cash machine withdrawal limit of 60 euros would be maintained. There were long lines at ATMs, where 20-euro banknotes have largely run out.

Greece’s immediate fate is in the hands of the European Central Bank, which kept a tight funding grip on Greece’s banks on Monday in a decision that will see them run out of cash soon.

There had been little prospect of the ECB adopting a more generous stance after Greeks voted overwhelmingly to reject the terms of an international bailout.

After five years of economic crisis and mass unemployment, Greek electors voted 61.3 percent ‘No’ to the bailout conditions already rejected by their radical leftist government, casting Greece into the unknown.

“You made a very brave choice,” Tsipras said in a televised address as jubilant supporters thronged Athens’ central Syntagma Square to celebrate the act of defiance of Europe’s political and financial establishment.

The euro slid against the dollar after the setback for Europe’s monetary union, and European shares and bonds took a hit when markets opened after the weekend. But the losses were contained and there was no sign of serious contagion to other weaker euro zone sovereigns.

Analysts with several international banks said a “Grexit” from the euro zone was now their most likely scenario.

EU officials said it would be hard to give Greece easier terms, not least because its economy has plunged back into recession since Tsipras’ Syriza party won power in January. Public finances were now in a far worse position than when the rejected bailout deal was put together.

But in Athens, citizens were unrepentant at their vote.

“I voted ‘No’ to austerity; I want this torture to end,” said Katerina Sarri, 42, a mother of two.

By Julien Ponthus and Lefteris Papadimas

France and Germany told Greece to come up with serious proposals in order to restart financial aid talks, raising pressure on Prime Minister Alexis Tsipras to compromise a day after his country voted overwhelmingly against more austerity.

After a meeting in Paris, German Chancellor Angela Merkel and French President Francois Hollande said Athens must move quickly if it wants to secure a cash-for-reform deal with international creditors and avoid crashing out of the euro.

Raising the stakes on the Greek leader ahead of a euro-zone summit on Tuesday, the European Central Bank decided to keep a tight grip on funding to Greek banks, which have been closed for more than a week to avoid a massive outflow of money that could lead to their collapse.

The ECB also decided to raise the amount of collateral Greek banks must post for any loans. The move doesn’t affect the lenders right away, but it was a warning shot by the ECB to Greek banks that their fate lies in its hands.

And a German finance ministry official dismissed the idea that Berlin would be willing to concede some debt relief to Athens, a position that Tsipras’ government has long sought.

Still, in a sign that Athens is keen to seek a new deal, Greece’s combative finance minister, Yanis Varoufakis, resigned, apparently under pressure from other euro zone finance ministers who did not want him as a negotiating partner.

Tsipras had earlier promised Merkel that Greece would bring a proposal for a deal to an emergency summit of euro zone leaders on Tuesday, a Greek official said. It was unclear how much it would differ from other proposals rejected in the past.

“The door is open for discussion,” Hollande told reporters, standing next to Merkel after talks at the Elysee Palace.

“It’s now up to the government of Alexis Tsipras to offer serious, credible proposals so that this will can be turned into a programme which gives a long-term perspective, because Greece needs a long-term perspective in the euro zone with stable rules, as the euro zone itself does.”

Hollande stressed that there is not much time left while Merkel urged Greece to put proposals on the table this week.

After the Greek ‘No’ vote, gloomy officials in Brussels and Berlin said a Greek exit from the currency area now looked ever more likely.

But they also said talks to avert it would be easier without Varoufakis, an avowed “erratic Marxist” economist who infuriated fellow euro zone finance ministers with his casual style and indignant lectures. He had campaigned for Sunday’s ‘No’ vote, accusing Greece’ creditors of “terrorism”.

His sacrifice suggested Tsipras was determined to try to reach a last-ditch compromise with European leaders.

Greece’s political leaders, more accustomed to screaming abuse at each other in parliament, issued an unprecedented joint statement after a day of talks at the president’s office backing efforts to reach a deal with creditors.

They called for immediate steps to reopen banks and said any deal must address debt sustainability – code for reducing Athens’ crushing debt – but gave no hint of concessions from the Greek side towards its creditors’ demands for deep spending cuts and far-reaching reforms of pensions and labour markets.

The chief negotiator in aid talks with international creditors, Euclid Tsakalotos, a soft-spoken academic economist, was appointed finance minister.

To win any new deal, Greece will have to overcome deep distrust among partners, above all Germany, Greece’s biggest creditor and the EU’s biggest economy, where public opinion has hardened in favour of cutting Greece loose from the euro.

While jubilant Greeks celebrated their national gesture of defiance late into the night, there was gloom in Brussels.

European Commission Vice-President Valdis Dombrovskis said there was no easy way out of the crisis and the referendum result had widened the gap between Greece and other euro zone countries.

An EU source said barring some major Greek concession, euro zone leaders were more likely to discuss on Tuesday how to cope with a Greek exit, and how to reinforce the remaining currency union, than any new aid programme for Athens.

The Greek bank association chief said an eight-day-old bank closure that has crippled the economy will continue on Tuesday and Wednesday and the daily cash machine withdrawal limit of 60 euros would be maintained. There were long lines at ATMs, where 20-euro banknotes have largely run out.

Greece’s immediate fate is in the hands of the European Central Bank, which kept a tight funding grip on Greece’s banks on Monday in a decision that will see them run out of cash soon.

There had been little prospect of the ECB adopting a more generous stance after Greeks voted overwhelmingly to reject the terms of an international bailout.

After five years of economic crisis and mass unemployment, Greek electors voted 61.3 percent ‘No’ to the bailout conditions already rejected by their radical leftist government, casting Greece into the unknown.

“You made a very brave choice,” Tsipras said in a televised address as jubilant supporters thronged Athens’ central Syntagma Square to celebrate the act of defiance of Europe’s political and financial establishment.

The euro slid against the dollar after the setback for Europe’s monetary union, and European shares and bonds took a hit when markets opened after the weekend. But the losses were contained and there was no sign of serious contagion to other weaker euro zone sovereigns.

Analysts with several international banks said a “Grexit” from the euro zone was now their most likely scenario.

EU officials said it would be hard to give Greece easier terms, not least because its economy has plunged back into recession since Tsipras’ Syriza party won power in January. Public finances were now in a far worse position than when the rejected bailout deal was put together.

But in Athens, citizens were unrepentant at their vote.

“I voted ‘No’ to austerity; I want this torture to end,” said Katerina Sarri, 42, a mother of two.

By Julien Ponthus and Lefteris Papadimas

Euro zone countries tried in vain to stop the IMF publishing a gloomy analysis of Greece’s debt burden which the leftist government says vindicates its call to voters to reject bailout terms, sources familiar with the situation said on Friday.

The document released in Washington said Greece’s public finances will not be sustainable without substantial debt relief, possibly including write-offs by European partners of loans guaranteed by taxpayers.

It also said Greece will need at least 50 billion euros in additional aid over the next three years to keep itself afloat.

Publication of the draft Debt Sustainability Analysis laid bare a dispute between Brussels and the Washington-based global lender that has been simmering behind closed doors for months.

Greek Prime Minister Alexis Tsipras cited the report in a televised appeal to voters on Friday to say ‘No’ to the proposed austerity terms, which have anyway expired since talks broke down and Athens defaulted on an IMF loan this week.

It was not clear whether an arcane IMF document would influence a cliffhanger poll in which Greece’s future in the euro zone is at stake with banks closed, cash withdrawals rationed and commerce seizing up.

“Yesterday an event of major political importance happened,” Tsipras said. “The IMF published a report on Greece’s economy which is a great vindication for the Greek government as it confirms the obvious – that Greek debt is not sustainable.”

At a meeting on the International Monetary Fund’s board on Wednesday, European members questioned the timing of the report which IMF management proposed at short notice releasing three days before Sunday’s crucial referendum that may determine the country’s future in the euro zone, the sources said.

There was no vote but the Europeans were heavily outnumbered and the United States, the strongest voice in the IMF, was in favour of publication, the sources said.

The Europeans were also concerned that the report could distract attention from a view they share with the IMF that the Tsipras government, in the five months since it was elected, has wrecked a fragile economy that was just starting to recover.

“It wasn’t an easy decision,” an IMF source involved in the debate over publication said. “We are not living in an ivory tower here. But the EU has to understand that not everything can be decided based on their own imperatives.”

The board had considered all arguments, including the risk that the document would be politicised, but the prevailing view was that all the evidence and figures should be laid out transparently before the referendum.

“Facts are stubborn. You can’t hide the facts because they may be exploited,” the IMF source said.

IMF spokeswoman Angela Gaviria declined comment on this report.

POLITICALLY ANATHEMA

Greek Finance Minister Yanis Varoufakis said in a blog post the IMF had upheld the Syriza party government’s contention for the last five months that debt relief should be at the centre of the negotiations.

“Puzzlingly, all this fine research by the good people at the IMF suddenly evaporates when IMF functionaries coalesce with their ECB and the European Commission colleagues in order to impose upon our government their chosen policies,” he wrote.

The IMF argues that Greece’s debt burden of nearly 185 percent of gross domestic product can only be made sustainable if the euro zone provides considerable extra financing through a mixture of new loans and a debt restructuring.

This is politically anathema in Germany, the biggest creditor country, and most other euro zone states, where no leader wants to explain to taxpayers that the money they lent to Athens will never be coming back.

Euro zone governments insisted in five months of talks this year that a lengthening of loan maturities and a reduction in interest rates would only be considered after Greece had implemented its commitments under a 2012 bailout deal, including painful structural reforms and public spending cuts.

In Brussels, the way the IMF communicated the findings was seen as confusing, misleading and politically unhelpful.

The European Commission had produced its own debt sustainability analysis, based partially on IMF data, which is less pessimistic in its scenarios and is one of the documents mentioned on the Greek referendum ballot paper.

Diplomats said the IMF’s publication of the study was a way of making clear it would only be part of any future loan pact with Greece if the Europeans included debt relief in the mix.

Germany and its north European allies have said the IMF’s presence is indispensable both to win parliamentary backing for aid for any euro zone partner, and to keep the European institutions honest. Berlin suspects the European Commission of being too soft on Greek efforts to wriggle out of reforms of pensions, taxation, public sector wages and labour law.

The European Central Bank, the third partner in what used to be called the “troika” of bailout enforcers, is also keen to keep the IMF involved.

By Paul Taylor (Reuters Exclusive)