The Economy

Greek Cash Crisis Heading for Crunch Time?

Greece reverses course and says it will indeed make its 450 million euro payment to the International Monetary Fund on April 9.
Matthew HellerApril 3, 2015
Greek Cash Crisis Heading for Crunch Time?

Things seemed to be building toward a showdown between Greece and its creditors amid concerns that the country will run out of cash on April 9, the deadline for a crucial 450 million euro payment to the International Monetary Fund.

Reuters reported that euro zone officials earlier this week rejected an appeal from Greece for more loans before reforms on which new disbursements hinge are agreed and implemented.

The new Greek anti-austerity government promised voters it would not implement most of the measures and Interior Minister Nikos Voutsis said Wednesday it would pay salaries and pensions on April 9 rather than meet the IMF deadline.

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Then on Friday Greece’s deputy finance minister said Greece indeed would pay the loan tranche due on April 9.

But creditors including Germany have said that for Greece to get the remaining 7.2 billion euros of its 240 billion euro bailout, Athens would have to agree on the reforms and implement them and there was no chance of releasing the funds on April 9.

“The Greek government’s cash position continues to decline,” George Saravelos of Deutsche Bank told The Telegraph. Even if the government manages to scramble enough money to make its obligations in the coming weeks, “it is highly unlikely there is sufficient cash flow to finance subsequent needs in May,” he added.

If Greece does not pay the IMF back next Thursday, it would fall into an arrears process with the IMF. The government also faces 2.4 billion euros in refunding of government bills this month.

In a 26-page document sent to the EU from Athens that was leaked to the Financial Times on Wednesday, the Greek government proposed a range of revenue-raising measures including tax evasion curbs and introduction of new taxes on luxury goods.

The document said the measures would raise 6.1 billion euros in 2015, but The Telegraph said they “are still unlikely to satisfy creditors who are demanding more details before they release” the remainder of the 240 million euro bailout.