Amid a looming default on its debts, Greece is willing to compromise on reforms on its pension system and primary surplus, but will not adopt further austerity measures as this would curb Greece’s ability to implement further reforms, wrote Greek Finance Minister Yanis Varoufakis on Tuesday in the Italian daily Il Sole 24 Ore.
Over the weekend, Interior Minister Nikos Voutsis told Greek Mega TV that four installments of 1.6 billion euros ($1.8 billion) expected to be paid to the IMF in June will not be made as there is no money left to make payments.
Conversely, Greek Prime Minister Alexis Tsipras said on Monday that although Greece is shut out of the bonds market and no bailout deal is in sight, the cash strapped country still intends to make payments to the IMF, however, in order to do so, it is in desperate need of emergency funding.
But if the country’s international lenders continue to set "unbearably high" primary surplus targets (by expecting Greece to increase its Value Added Tax rate and balance its pension budget) the country’s government says it will not be able to meet the terms and says it believes that a lower primary surplus would help Greece’s lethargic economy expand at a faster pace, enabling it to repay creditors on time.
If a deal is not reached and international lenders do not disburse further funding, Athens may default on its obligation to make the IMF loan payment.
However, a German senior official who wished not to be named said on Tuesday that if Greece is sincere about what they say in regards to making payments, "there is reason to believe that we will not be talking about a default situation around June 5, neither before or immediately thereafter."
In an attempt to keep track of the negotiation process between Greece and its foreign lenders - namely the International Monetary Fund, the European Central Bank and the European Commission - a euro zone official said that deputy finance ministers would hold a teleconference on Thursday.