ATHENS – Unless international lenders bend and release a delayed 7.2-billion euro ($8 billion) installment, Greece won’t be able to pay the International Monetary Fund on June 5, as the government presses for a deal by the end of May.
Pensions and salaries will be paid this month by scraping together what’s left in state coffers but that will be the last unless more money comes in from the lenders at the same time Prime Minister and Radical Left SYRIZA leader Alexis Tsipras says he won’t give on to the tough austerity conditions needed for its release.
Greece faces several payments totaling 1.5 billion euros ($1.7 billion) to the IMF, which, along with the European Union and European Central Bank makes up the EU-IMF-ECB troika that has put up 240 billion euros ($266 billion) in two bailouts since 2010, most of which run out this year.
“Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5,” SYRIZA’s Parliament Speaker Nikos Filis told ANT1 television. “If there is no deal by then that will address the current funding problem, they won’t get any money,” he said, referring to the IMF.
That could trigger a default and push Greece toward a Eurozone exit and economic catastrophe but hardline elements in the motley collection of Far Leftists in SYRIZA say they’d prefer that to giving to demands for more austerity measures they campaigned against.
A payment of about 750 million euros to the IMF last week was only made after emptying a holding account at the institution and Greece can’t do that again. At the same time the country is locked out of the markets by prohibitively high interest rates and investors have been scared off.
Tsipras’ long run aim is also for debt restructuring and an investment plan although neither are in sight. Meanwhile, Labor Minister Panos Skourletis said the government will struggle to met the IMF payments.
“Things will be difficult” if an agreement is not reached soon, he conceded.
Talks with the troika have dragged since the government on Feb. 20 was given a four-month bailout extension, which it has used to badmouth the lenders and failed to come up with a credible list of reforms needed to unlock critical aid.
“There is no money for the foreign (lenders) when they have not given us any funds for a year,” Filis said. “We don’t have it to make the payment and this is part of the discussion,” he added.
He said the government would make sure that it has money to pay pensions and wages before servicing debt repayments to the IMF.
EU leaders played down Greece’s hopes of a swift end to negotiations on an aid agreement and said talks needed to speed up before the country runs out of cash. Tsipras said he wants the money without conditions.
Filis said the government is seeking a deal that will not include further pension cuts, aiming for lower primary budget surpluses and a debt restructuring.
LONG TIME COMING
While both sides said very little progress has been made, Tsipras and Finance Minister Yanis Varoufakis have insisted for weeks that it’s close.
In comments during an interview with Star channel Varoufakis said he believed a deal was likely “in about a week,” similar to what he’s been saying previously without it happening.
He said the troika was considering a Greek proposal for overhauling Value Added Tax (VAT) tax rates despite reports it has been rejected, adding to the mixed messages and confusion that has been the hallmark of the coalition government’s short reign so far.
There reportedly was an agreement at the technical level that Greece must hit a primary surplus target of one billion euros this year, excluding interest on debt, the cost of running cities and towns and state enterprises, state health insurance and some military expenditures.
A primary surplus though could also be reached only by continuing not to pay bills to vendors, with the arrearage piling up and some suppliers threatening cut-offs.
Differences remain however on the issues of cutting pensions again and labor reform, including Greece’s insistence on restoring collective bargaining for workers which had been stripped by previous governments.
BIG MAY PUSH
Addressing a joint press conference in Berlin, German Chancellor Angela Merkel and French President Francois Hollande said talks must be accelerated to get an agreement by the end of May.
“We must speed things up,” Hollande said, adding that Greece has “financial needs so financial resources need to be found.” Both leaders said they were prepared to meet with Tsipras this week on the sidelines of an EU meeting in Riga, the Latvian capital.
European Commission President Jean-Claude Juncker said he expected a deal by late May or early June and denied reports he had proposed a compromise deal to Athens.
German Finance Minister Wolfgang Schaeuble said talks were moving too slowly despite progress in “sub-areas,” according to Reuters.
Eurozone chief Jeroen Dijsselbloem told RTL Z channel: “We are intensively busy with the Greeks and we are making progress, I would say cautiously.” He added that it was “not a given” that a breakthrough could be achieved in Riga.
SHOW ME THE MONEY
Tsipras reportedly wants political backing in Riga for release of the money now with the promise of reforms later, although he said that excludes pensions and labor laws – which the troika most wants.
Greece wants 3.7-billion euros ($4.11 billion) in the European portion of the delayed loan to be disbursed even if the IMF holds back the 3.5 billion euros it’s due to pay.
If that doesn’t work, Greece wants the ECB to lift the ceiling on Treasury Bills that can be issued although the last auction saw no willing buyers except for teetering Greeks banks who are playing tit-for-tat with the government, swapping monies back and forth to buy time.