Greece to default without bailout deal
GREECE cannot make an upcoming payment to the International Monetary Fund (IMF) on June 5 unless foreign lenders disburse more aid, a senior ruling party lawmaker said yesterday, 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 cashfor-reforms deal in days, although EU 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 (R20bn) to the IMF come due next month, starting with a 300 million 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, said.
“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’ demand to roll back labour and pension reform as well as lower fiscal targets set under its bailout programme.
Among concessions Athens was mulling was a special tax on banking transactions to help raise revenue to meet fiscal targets, though discussion of the levy was 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 measures 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.
Four days before the payment was made, Tsipras wrote to EU and IMF lenders warning that Athens could not make the 750m payment – prompting accusations of a bluff that has deepened mistrust.
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 euro zone exit.
The European Central Bank’s governing council was due to meet later yesterday and was to decide whether to dole out more emergency liquidity assistance to Greek banks, who have been kept on a drip-feed of liquidity injections amid the crisis.
Political push
Despite the spectre of impending bankruptcy, Tsipras has sought to maintain a brave face in public and will lobby European leaders at the EU summit in Riga this week for a political agreement to break the impasse.
Briefing top parliamentary officials in his party on Tuesday, Tsipras said the government was aiming for a deal by June 3 that would release over
7bn in pending aid from the bailout, said one lawmaker who attended the briefing.
He also expressed optimism that differences with lenders on value-added tax hikes, privatisation and budget targets could be bridged to strike a deal now. Greece is pushing to delay discussion of pension reform to later this year.
Such a delay would be unlikely to win the sympathy of the lenders, who want Athens to offer more concessions and focus on bridging differences at technical-level talks aimed at trying to make the numbers on work. – Reuters BRITISH retailer Marks & Spencer (M&S) raised hopes that it has finally rediscovered a winning formula, reporting a rise in annual profit for the first time in four years and its intention to return excess cash to shareholders. The retailer posted a profit before tax and one-off items of £661.2 million (R12.3 billion) in the year to March, up 6 percent year on year and above a consensus analysts’ forecast of £648m. Shares have risen by a third over the past nine months. They were up 1.2 percent at £5.78 in early trading yesterday. – Reuters
RUSSIA
CARLSBERG, the maker of Tuborg beer, had cut about 180 jobs as it was challenged by a shrinking economy in Russia, where it was the biggest brewer, the company said yesterday. Carlsberg had reduced its staff of 900 at its Copenhagen headquarters and regional offices by about 20 percent, it said in a statement. Of that, 75 jobs were slashed in Denmark. Carlsberg employed an average of 46 832 people last year. – Bloomberg
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