[ 2015-05-25 ]

Greece cannot pay IMF, says minister
Greece is bankrupt and will default on a debt
repayment to the International Monetary Fund that
is due in two weeks, the country’s interior
minister said yesterday.
The declaration comes as the left-wing government
struggles to pay pensions and public sector wages,
and talks between Greece and the IMF remain
deadlocked.
“The four instalments for the IMF in June are
€1.6 billion. This money will not be given and
is not there to be given,” Nikos Voutsis said.
Without a deal to unlock eurozone loans, Greece
will be unable to pay IMF bailout instalments due
next month, with further payments of more than
€5 billion owed to the eurozone and the fund in
July.
The first repayment to the IMF of €307 million
falls due on June 5, followed within days by other
payments totalling more than €1.2 billion.
Eurozone and IMF officials are withholding €7.2
billion in bailout loans until Greece honours
commitments to austerity measures, including cuts
to pensions and labour reforms that make it easier
to cut wages or sack workers.
Without an eleventh-hour deal, a Greek default
will trigger a eurozone crisis this summer,
leading to the introduction of capital controls,
plunging Greece into economic meltdown and
potentially causing the break-up of the euro.
Yanis Varoufakis, the Greek finance minister,
warned that it would be “catastrophic” if
Greece left the euro, marking “the beginning of
the end of the common currency project”.
He called on the eurozone to climb down on its
“red line” austerity demands as the EU, IMF
and Greece hold frantic negotiations to avert a
default.
“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,” he
said.
Shut out of bond markets and with bailout loans
blocked by the IMF and the eurozone, the Greek
government has already raided its cash reserves
and emptied state coffers to meet debt obligations
of almost €1 billion to the IMF last month.
The cash crunch means that Greece will struggle to
pay public sector wages and pensions that are due
at the end of this week as pessimism deepens over
the country’s prospects.
Foreign tour operators are now forcing hoteliers
in Greece to sign contracts with a Greek default
clause, and many companies have moved cash
reserves abroad as the liquidity shortage bites.
Research by I Kathimerini, the Greek newspaper,
found that 85 per cent of the cash reserves —
more than €9 billion — held by the 233
Athens-listed firms had been moved out of the
country over the past seven months.
“We need to minimise the unforeseeable
consequences from possible capital controls,”
one company told the newspaper. “We never
expected we’d be in May without a decision on
the country’s funding.”
If Greece announces a default on June 5, the
country would be expected to announce preparations
for capital controls and the possible introduction
of a parallel currency of state IOUs over the
following weekend.
On Sunday, June 7, G7 leaders will meet in Germany
for talks that could set the scene for a Greek
exit and the end of the euro as a monetary union
of 19 countries.
Talks have been deadlocked since Syriza came to
power in January after pledging to oppose the
austerity measures imposed by the EU and IMF as
the condition of bailouts worth €240 billion in
2010 and 2012.
Alexis Tsipras, the Greek prime minister, said on
Saturday that the country was ready to accept a
“viable agreement” with the eurozone and the
IMF but not on “humiliating terms”. “We have
made concessions but we also have red lines,” he
said.

Source - The Times(UK)

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