Greece set for June default if talks fail

news
25 May 2015

Greece, the debt-strapped euro zone nation, cannot make repayment of international bailout loans due on 5 June as it does not have the money, according to Nikos Voutsis, the country's interior minister.

Greek interior minister Nikos VoutsisIn an interview with Greek television Mega TV yesterday the minister said, ''The four installments for the International Monetary Fund (IMF) in June are 1.6 billion ($1.8 billion). This money will not be given and is not there to be given.''

For Greece, which is deprived of the bond market now, a deal with the international creditors in the next few days is crucial to avoid a bankruptcy.

"We are discussing, based on our contained optimism, that there will be a strong agreement so that the country will be able to breathe. This is the bet," Voutsis said.

The left-wing Syriza-led Greek government has been negotiating for months with its international creditors for striking a deal to crawl out of the debt crisis amid its domestic financial obligations.

Apart from the IMF's 1.6-billion, about 1 billion is additionally required for pension and wages in early June.

The talks with euro zone members and the IMF could see the release of the final installment of 7.2 billion of the 240-billion bailout.

Greek finance minister Yanis VaroufakisThe talks with the ''troika'' comprising the IMF, European Union (EU) and the European Central Bank (ECB), are stuck on issues related to economic reforms which the lenders are insisting before the release of any aid.

The Greek government wants the money released without imposing tough reforms and spending cuts agreed with the country's previous right-wing government.

The country is struggling with an unemployment rate of 26 per cent and a debt-to-GDP ratio of 177 per cent. The nation's GDP has fallen about 25 per cent in the last five years.

An IMF default could push Greek out of the euro bloc.

Earlier, Greece has said that it plans to make all upcoming payments, although it is in danger of running out of money without a deal.

Speaking at a BBC show, Greek finance minister Yanis Varoufakis said yesterday that his country has made ''enormous strides'' at reaching a deal with its lenders.

Greek Prime Minister Alexis Tsipras"It is now up to the institutions to do their bit. We have met them three-quarters of the way, they need to meet us one-quarter of the way," Varoufakis said.

It would be "catastrophic" if Greece left the euro, predicting it would be "the beginning of the end of the common currency project, he said.

Any deal with the international creditors has to be agreed by country's prime minister Alexis Tsipras.

Meanwhile, a recent opinion poll showed support for the Greek government's tough stance in its negotiation with the lenders, with 54 per cent backing the government's actions although they wanted to retain euro as the currency.

A vast majority of the people surveyed were against any further austerity measures including pension cuts and mass lay-offs.





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