Dragging its feet for months while failing to produce a reforms list for international lenders could be very costly for Greece, world reports say.
What Would Greek Default Look Like
CNBC – Holly Ellyatt
While Greece has denied it is about to default on its debt obligations, there are growing concerns the country will not be able to make a slew of onerous loan repayments to its international creditors—prompting analysts to debate what form a future default could take.
These analysts are unconvinced that further negotiations, due to take place on April 24 between Greece and the Eurogroup of finance ministers, will be fruitful. This could see further aid withheld from Greece, leaving the country struggling to make upcoming repayments and potentially liable to default.
Robert Kuenzel, director of euro area economic research at Daiwa Capital Markets, warned on Tuesday that Greece’s cash buffers were “increasingly thin” and that a default could be “very nasty.”
Greece Getting Ready to Default
Business Insider – Mike Bird
Greece is getting ready to default on at least some of its debt payments, according to the Financial Times.
The country has entered a pretty dire fiscal situation. It desperately needs to unlock bailout funds from its creditors, but progress negotiating that cash is shaky at best.
If Athens doesn’t get its next €7.2 billion ($7.58 billion) bailout tranche by the April 24 Eurogroup meeting of European finance ministers, default becomes a lot more likely, and it seems as if the government is already preparing for the worst. Here’s the FT:
Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government’s thinking.
The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.
“We have come to the end of the road … If the Europeans won’t release bailout cash, there is no alternative [to a default],” one government official said.
Quickly after the FT’s story emerged, the Greek government denied that it was planning for a default. But given the country’s financial situation, it would probably be careless if it was not at least looking at the scenario.
The International Monetary Fund makes a point of never restructuring debts it’s owed. If Greece doesn’t make a payment, it has a grace period of about a month to transfer the money, at which point it would have undoubtedly defaulted.
Greece Denies Default Accusations
Greece has denied reports it is preparing to default on its loans if it cannot reach agreement on its bailout terms with international creditors.
A government spokesman said negotiations were proceeding swiftly towards a solution.
Greece negotiated a three-month extension to its €240bn (£176bn; $272bn) bailout at the end of February.
The Greek government is due to pay the International Monetary Fund (IMF) €203m on 1 May and €770m on 12 May.
But reports suggest the government is rapidly running out of money. It needs to find €2.4bn to pay civil service salaries and pensions this month.
The Greek government has also dismissed media reports that it was considering calling early elections if it failed to negotiate a settlement with its international creditors.
Last week, eurozone officials said Greece only had six working days left to come up with a revised list of reforms to seal a deal on its next rescue bailout.