90% chance Greece will leave eurozone – Citi

The chance of Greece leaving the euro in the next year has raised to 90 per cent from the previous 50 per cent, Russia Today cites America’s Citigroup as saying.

Greece will drop out of the eurozone and reinstate the drachma in the next 12-18 months, according to a report published on Thursday.

Citi economists had previously put the chances of a Greek exit at 50 to 75 per cent.

To keep Greece afloat, the European Union and IMF provided €110bln in bailout loans in May 2010. The money was to help the government pay its creditors. After that, a second, €130bln bailout was agreed earlier this year.

Economists calculate that Greece may need a third rescue package worth up to €50 billion. Greece has started a major austerity drive involving drastic spending cuts, tax rises, and labour market and pension reforms. The majority of Greece's private creditors have agreed to write off more than half of the debts owed to them by Athens.

According to estimates, Greece owes French banks €41.4bln , German banks €15.9bln, UK banks €9.4bln and US banks €6.2bln.

The Citi report also said Italy and Spain may receive a formal bailout from the European Union and the IMF in addition to the banking aid Madrid has already asked for.