Greece says it will default in June without loan
• Greece cannot make an upcoming payment to the International Monetary Fund on June 5 unless foreign lenders disburse more aid, a senior ruling party lawmaker said on Wednesday, the latest warning from Athens it is on the verge of default.
Prime Minister Alexis Tsipras’s leftist government says it hopes to reach a cash-for-- reforms deal in days, although European Union and IMF lenders are more pessimistic and say talks are moving too slowly for that.
Greek officials now point to a race against the clock to clinch a deal before payments totalling about 1.5-billion euros (US$1.7 billion) to the IMF come due next month, starting with a 300-million euro payment on June 5.
“Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5,” Nikos Filis, spokesman for the ruling Syriza party’s lawmakers, 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.
Talks between Greece and its lenders have foundered on Athens’s demand to roll back labour and pension reform as well as lower fiscal targets set under its bailout program.
Among concessions Athens is mulling is a special tax on banking transactions to help raise revenue to meet fiscal targets, though discussion of the levy is at an early stage, two sources close to the talks said.
If the talks collapse, Tsipras’s government has made clear it will pay pensioners and public workers before servicing debt.
Greek officials have warned several times in recent weeks that Athens could run out of cash, only to then scrape through obligations by resorting to draconian meas- ures such as ordering state entities to hand over cash or in the case of an IMF payment last week, by emptying out an IMF reserves account.
Still, analysts agree the country’s cash squeeze is increasingly acute and fresh aid will be needed sooner or later to avoid bankruptcy. Ratings agency Moody’s said there was a high likelihood that capital controls and a deposit freeze could be imposed as savers pull deposits from banks over fears of a national bankruptcy and a Greek eurozone exit.