After almost three months of stalled talks with international lenders, the feeling is Greece has no idea what it’s doing to stave off default and bankruptcy, world press reports say.
Desperation Sets in as Greece Makes IMF Payment
BBC – Chris Morris
So Greece has successfully completed its latest €750m (£538m) debt repayment to the International Monetary Fund (IMF), but even that news has a twist in the tail.
Greek officials say most of the money was taken from a buffer account held at the IMF itself – an account that is only meant to be used in cases of emergency.
In such circumstances it is hardly surprising that Greek Finance Minister Yanis Varoufakis used his visit to Brussels on Monday to re-state the obvious – the liquidity situation is “terribly urgent”, he said, and a deal to release further funds was needed in the next couple of weeks.
A word of caution. If every warning from either Athens or Brussels that Greece was about to run out of money had proven to be true, the country would have gone bankrupt several times already.
But with no new money coming in from its international lenders since August last year, the situation has become desperate.
Greece’s largest pension fund, the Social Security Foundation, has decided to take €360m in short term loans to try to ensure that it can pay its members at the end of the month.
Most government suppliers haven’t been paid since January.
As it casts around for cash, the government has said it has raised a total of €600m from local governments and other public entities. But it had been hoping for more – many municipalities have refused to co-operate.
Greece Dodged Economic Bullet
Bloomberg – James G. Neuger, Stephanie Bodoni and Karl Stagno Navarra
Greece handed the European Central Bank an excuse to maintain the life support for its financial system by persuading its skeptical German-led creditors it’s serious about delivering the policies needed to escape a default.
Less than three weeks after a Greek aid meeting broke up in taunts and acrimony, Finance Minister Yanis Varoufakis assured euro-area governments that his country is aiming to strike a bargain to win the final installments of its 240 billion-euro ($268 billion) aid program.
“We are making faster progress,” Dutch Finance Minister Jeroen Dijsselbloem told reporters in Brussels on Monday after leading a meeting of euro ministers. “I’m not satisfied but just a bit more optimistic.”
Pressure on the two sides had intensified with the ECB due to reassess the emergency liquidity lines keeping the Greek banking system in business on Wednesday.
Although some central bankers are pushing for stricter terms, it’s now unlikely that policy makers will decide to restrict funding this week, according to two European officials.
Greece said it will surmount another hurdle this week, when it repays about 750 million euros to the International Monetary Fund. A transfer order was put in Monday, two Greek officials said.
More payments to the IMF and the redemption of bonds held by the ECB beckon between now and September, though Varoufakis suggested Greece may not get that far without help.
“The liquidity issue is a terribly urgent issue,” he said. “We are talking about the next couple of weeks.”
Looks Like Greece Has No Plan A or Plan B
Reuters – Hugo Dixon
Strategy is a word with Greek roots. But, sadly the current government led by Alexis Tsipras doesn’t seem to have a strategy for extricating the country from its parlous state.
Its government lacks a credible plan for reaching agreement with its euro zone creditors and the International Monetary Fund. It doesn’t seem to have a thought-out fallback plan of how to default while containing the damage either.
Greek financial markets have perked up in the past few weeks, largely because Yanis Varoufakis, the combative finance minister, has been sidelined from discussions with the country’s creditors.
The new composition of the negotiating team has, indeed, led to more productive talks. But there is still a mountain to climb and little to no chance of a deal when euro zone finance ministers meet on May 11.
When Tsipras took power in January, he seems to have thought he could extract more cash from his creditors as well as secure relief on Athens’ debts without undertaking serious reforms. This was pie in the sky.
The government also didn’t initially factor into its calculations how badly the economy would be damaged by months of political uncertainty and a desperate liquidity crisis.
In November, the European Commission was predicting growth of 2.9 percent this year. Last week, it cut that to 0.5 percent and even that could prove optimistic.
The deteriorating economy means Athens will find it a lot harder to balance its books. Even if its creditors lower the budget target for this year, the government will have to introduce more austerity measures – and that will further damage the economy.
Athens’ cash position is desperate. All in all, Greece owes around 324 billion euros, says the Greek debt management agency. Within that it needs to repay the IMF 750 million euros on May 12 and give it a further 1.5 billion euros in June.
Tsipras hopes he can persuade his euro zone creditors to lend Greece some cash in the next few weeks to stave off bankruptcy. But that will only be possible if he crosses red lines he has said he wouldn’t – on matters such as pensions, labour law and value-added tax.
Even if Athens survives its immediate liquidity crunch, it will struggle to secure a long-term deal. Negotiations on that are scheduled to finish by the end of June but they are not supposed to start until the talks on the short-term deal are concluded.
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