Greece unable to make June 5 payment without deal

The race is on for Athens to achieve the release of emergency funds, despite making steady progress towards a deal with its international creditors

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

If international lenders do not agree on a bailout deal, Greece will not be able to make a repayment to the International Monetary Fund (IMF) on June 5, the government's parliamentary speaker said on Wednesday.

Recently, Greek Finance Minister Yanis Varoufakis stated that a deal could be reached within a week and a “Grexit” was “not in our thoughts.”

Following Varoufakis’ comments, Christine Lagarde, head of the International Monetary Fund, gave an optimistic assessment of Greece’s situation and stated the country is making some progress in talks with negotiators.

However, the debt strapped country is running out of money fast and will no longer be able to pay its own public sector workers unless its eurozone creditors unlock the remaining €7.2bn bailout fund within a few weeks. Without a deal the country is expected to default. 

Greece owes a total amount of about 1.5 billion euros ($1.7 billion) to the IMF next month, including the €300m due on June 5.

"Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5," parliamentary speaker Nikos Filis, from the ruling Syriza party, 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.

The negotiation talks with the European Union and International Monetary Fund lenders have stretched out over 4 months now. 

Keeping in mind the cash-for-reforms deal, Greece was hoping for a successful agreement to be reached last week when making the obligatory payment of €750 million to the IMF. However, the leftist Greek government was challenged once again over pension and labour reform proposed by the creditors.

"There is no money for the foreign [lenders] when they have not given us any funds for a year," Filis said. "We don't have it to make the payment and this is part of the discussion." 

The parliamentary speaker also noted that the upcoming payment of pensions and wages is a priority of the Greek government, and will make sure they secure enough money to make these payments before the upcoming servicing of debt repayments to the IMF.

Recently, Athens proposed a tax overhaul.  However international creditors rejected the proposal on the basis that it would not help the country’s budget, according to Bloomberg. It was also reported that a new set of proposals are expected from Greek Prime Minister Alexis Tsipras.

TRTWorld and agencies