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Interior minister says Greece risks debt default in June

Louisa Gouliamaki, AFP | A man shouts slogans during a protest in Athens on May 20, 2015

Greece cannot make debt repayments to the International Monetary Fund (IMF) next month unless it achieves a deal with creditors, its interior minister said on Sunday, the most explicit remarks yet from Athens about the likelihood of default.


“The four installments for the IMF in June are 1.6 billion euros. This money will not be given and is not there to be given,” Interior Minister Nikos Voutsis told Greek Mega TV’s weekend show.

His declaration echoed warnings last week by Syriza’s parliamentary group leader Nikos Filis, who said Greece's cash crunch is so tight that it might not be able to make its June 5 payment to the IMF.

Shut out of bond markets and with bailout aid locked, Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation euro zone potentially at stake.

The interior minister was asked about his concern over a “credit event”, a term covering scenarios like bankruptcy or default, if Athens misses a payment. “We are not seeking this, we don’t want it, it is not our strategy,” Voutsis said.

“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,” he added.

Preparing Greek public

The government is under pressure to agree to more cuts and reforms to secure the funding, but opposes measures which it says make the situation worse by preventing recovery from one of the deepest recessions in modern times.

Voutsis said the government was determined to fight against the lenders’ strategy of “asphyxiation”.

“This policy of extreme austerity and unemployment in Greece must be hit,” he said. “We will not escape from this fight.”

In an effort to placate the hard-left faction of his Syriza party, Greek Prime Minister Alexis Tsipras said on Saturday the government was on a final stretch towards a deal but would not accept “humiliating terms”.

Energy Minister Panagiotis Lafazanis, who sides with the party’s hard-left faction, told its central committee on Sunday the government must prepare the Greek people in case there is no deal in the coming days that is compatible with its promises.

“The so-called institutions in the last four months have applied a drip-feed torture on the Greek people, one of the most horrible blackmail practices in world history, at the expense of the country,” he said.

He told top party leaders the government must be ready for any possible alternative solution to avoid new measures and privatisations.

‘One-quarter of the way’

After two days of deliberations, the party’s central committee on Sunday approved Tsipras’s proposed line on the negotiations that a deal should include low primary budget surpluses, no cuts in wages and pensions, a debt restructuring and an investment programme.

The hard-left faction’s call to voluntarily miss its next International Monetary Fund loan payment was rejected by a majority of Syriza leaders.

Finance Minister Yanis Varoufakis said Greece had made “enormous strides” towards reaching a deal with its lenders to avert bankruptcy but it was now up to the institutions to do their bit.

“We have met them three-quarters of the way, they need to meet us one quarter of the way,” he told Britain’s BBC on Sunday.

Varoufakis also said it would be “catastrophic” if Greece left the euro, predicting it would be “the beginning of the end of the common currency project”.

He said in the last four months Athens had managed to pay public sector salaries, pensions and dues to the IMF by extracting 14 percent of national output, doing “remarkably well” for an economy that doesn’t have access to money markets.

“At some point we will not be able to do it and at some point we are going obviously to have to make this choice that no minister of finance should ever have to make,” Varoufakis said.


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