Greece has no money to pay imf June

Greek Prime Minister Alexis Tsipras

Unless more funds are released from its bailout loan, Greece will not have funds to pay the International Monetary Fund on June 5. No funds have been released from the loan since last August. Greece has been negotiating for four months with its creditors but has yet to provide a package of reforms that satisfies  and meets the conditions that are part of the terms for payments from the loan to be released.

Greece has been raiding pension funds, and borrowing from municipalities and wherever else it can to pay for loan instalments, pensions, and wages but is running out of ways to raise cash. The government keeps saying a deal is close that would allow the remaining 7.2 billion euros ($7.9 billion US) to be released and avoid Greece going into default. Nikos Voutis the Greek Interior Minister said on TV: "The four instalments for the IMF in June are 1.6 billion euros. This money will not be given and is not there to be given. We are discussing, based on our contained optimism, that there will be a strong agreement (with lenders) so that the country will be able to breathe. This is the bet."

Prime Minister Alexis Tsipras said that Greece was prepared to accept a viable and long-lasting deal with its creditors but not on humiliating terms. However, Greece has already given way on two of its "red lines" on taxation and privatization. So far it has not caved on the issues of labour market and pension reform. If it did so this would certainly be a deal on humiliating terms since none of the austerity measures the ruling Syriza party campaigned against would have been removed. Politicians are often able to spin a defeat as a victory however. Polls show that the Greek public want to remain in the euro zone even if the government demands are not met. Greece may be able to convince creditors to lower the target for budget surpluses.

Nevertheless, Voutis claimed: "This policy of extreme austerity and unemployment in Greece must be hit. We will not escape from this fight."  The Syriza party's central committee approved negotiations that included, low budget surpluses, no cuts in wages and pensions, and a debt restructuring and investment program. Unless the creditor institutions of the IMF, European Central Bank, and European Commission, formerly known as the Troika, change their position, they will probably demand pension and wage cuts. A deal seems unlikely unless the government caves on these issues.

Some on the left in the Syriza party said that the government should be preparing the Greek populace for what might happen if Greece defaults. Critics of Syriza have long been calling for the government to have a plan B strategy to deal with a situation where no deal is reached. So far party leaders including the Prime Minister Alexis Tsipras, and finance minister Yanis Varoufakis have refused to face this issue and have said they intend to remain in the euro zone and will do whatever is necessary to reach a deal. Even if a deal is reached that allows Greece some breathing space in June more large payments are due in July and August. Greece claims that it will not ask for a new bailout package. How payments could possibly be made through the summer without even more borrowed funds is not at all clear. Many are beginning to think that Greece is bound to default and the only question is when and what happens after that.

Sources:
http://www.reuters.com/article/2015/05/24/us-eurozone-greece-imf-idUSKBN0O908520150524
http://news.yahoo.com/greece-not-accept-humiliating-terms-premier-says-131056366.html
http://www.bbc.com/news/business-32864068

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