Time is ticking fast for the debt burdened Greece who is now heading towards a deficit, as International Monetary Fund (IMF) warns of no funds if progress isn't made between Greece and its international lenders at the Brussel-based talks.
Athens will need to assure lenders of applicable reforms in order to unlock the remaining 7.2 billion euro ($8 billion) of aid which they are desperately seeking to maintain.
At the end of June, the Greek bailout program will come to an end. Officials are now working hard to push a new bailout agreement with the European Union, European Central Bank and the IMF. However, the quiet atmosphere around negotiation talks, which commenced on the weekend doesn't illustrate a good picture.
Citing many important players in the Greek deal, including head of the IMF’s European department, Poul Thomosen. The Financial Times reported that the gap between the two realities is very large right now, and that both Athens, which was resisting new economic reforms, and eurozone creditors would probably fight the IMF on the issue.
Initially, Greece was forecasted to run a primary surplus of 3 percent of its gross domestic profit however, the IMF now believes that they are on the road to run a primary budget deficit of as much as 1.5 percent in 2015.
A debt deficit in the Greek economy will mean more debt for the country. The deficit problem however can be resolved through either stern measures or the unlikeliness of creditors to sign off large debt amounts.
Greek officials are also working to speed up talks while trying to maintain its ties with lenders.
The Deputy Prime Minister of Greece, Yannis Dragasakis went to Frankfurt on Tuesday to meet with the president of the European Central Bank, Mario Draghi.
Finance Minister Yanis Varoufakis on the other hand is having meetings with French counterpart, Michel Sapin and EU commissioner Pierre Moscovici. Varoufakis, has also been given consent by Greek Prime Minister Alexis Tsipras to participate in the next meeting with the finance ministers of the Eurozone.
In response to IMF’s warning published on the Financial Times, Greece’s share index declined by 2.8 percent while their banking stocks slumped close to 6 percent.
Additionally, Greek 10-year yields rose 50 basis points to 11.17 percent in comparison to Monday’s sunken results of 9.84. The two-year yields on the other hand climbed up to 167 bps at 21.22 percent.