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Greece is gearing up to default on its debts

According to the Financial Times, that is.

Image: theilr

THE NEW LEFT-WING government of debt-stricken Greece is getting ready to default on its next tranche of bailout loan repayments, according to one report.

The country paid its last instalment of €459 million on Thursday after weeks of speculation it wasn’t going to be able to meet the IMF deadline.

But yesterday the Financial Times reported the Greek administration was preparing for the dramatic step of defaulting on €2.5 billion in IMF repayments due in May and June if it couldn’t negotiate a new deal with creditors.

We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative (to a default),” it quoted an unnamed government official as saying.

Russia Greece Source: AP Photo/Ivan Sekretarev

Greece has been struggling to raise money to fund its obligations after effectively being shut out of international money markets, instead relying on short-term borrowing to pay for state services and its loans.

The country took over €240 billion in loans from the EU and IMF in return for strict austerity measures, however the recently-elected Syriza government has vowed to row back on those agreements – putting it on a collision course with lenders and other European powers.

Deadline approaching

Athens has been given a deadline of next week to release a list of reforms to unlock €7.2 billion in bailout funding ahead of a meeting of eurozone finance ministers on 24 April.

The money was held back after the country and its creditors hit a roadblock over further austerity measures like pension cuts and plans to make it easier for businesses to sack workers.

Syriza has been putting together a list of less-stringent measures it can agree in return for getting access to the money.

Greece Varoufakis Interview Greek Finance Minister Yanis Varoufakis Source: AP Photo/Petros Giannakouris

Goodbody chief economist Dermot O’Leary said it was clear Greece was “very close to running out of cash” – but similar rumours of an impending default had also come and gone in recent months.

“It is likely, therefore, that these leaks are part of the negotiating tactics of the Greek government ahead of the next finance ministers meeting,” he said in a briefing note.

It is hoped that a final agreement can be reached at that meeting, but given the comments coming from some involved in the process, this looks to be a massive ask.”

Greece has further inflamed relations with Germany, the most influential of the eurozone states, after recently claiming it was still owed €278 billion in Nazi-era war reparations.

- With AFP

READ: Cash-strapped Greece is cosying up to Russia now >

READ: The government says it saved over €10 billion by complaining to the Troika >

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About the author:

Peter Bodkin  / Editor, Fora

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