Greece’s debt problems are weighing on the euro today as the cash strapped country moves closer to defaulting on its loans with its international creditors and Athens drags its feet on accepting the terms of a new loan agreement that would unlock €7.2 billion in final bailout funds of a €240 billion rescue package.
Greek government leaders are scrambling to scrape up enough cash to make a €1.6 billion payment to the IMF due in June, pay €1 billion in public sector wages and pensions, and service €5.6 billion in short-term Treasury bills also due in June.
In July Greece owes over € 6 billion which includes a €3.8 billion payment due to the European Central Bank.
Greek Interior Minister Nikos Voutsis said on Mega TV over the week-end that Athens can’t make the €1.6 billion payment to the IMF in June unless it first works out a “reasonable agreement” with its international creditors.
“This money will not be given and does not exist to be given” Voutsis said.
According to Voutsis, any future bailout agreement must first go through Parliament and he did not rule out the possibility of a referendum vote.
After being elected in January, Greece’s anti-austerity Syriza Party has refused to play by the same austerity rules of other European countries receiving a bailout from its international creditors, known today as the “three institutions”, consisting of the IMF, ECB, and the EU.
Syriza has stood its ground and maintained its own red lines concerning labor and pension reforms while showing little interest to increase its VAT tax structure, or value added tax, that is aimed at generating higher tax revenues to make up for other budget deficits.
“I think that they are still far apart from each other and I think that every side is sticking to his own view on this and clearly there is not enough pressure at this particular point to reach a deal” said Jacques Cailloux, Chief European Economist at Numura International, on Bloomberg’s Pulse aired on May 22nd.