Wednesday 17 January 2018

Give us bailout cash or we will default, Greek minister warns

Alexis Tsipras
Alexis Tsipras

Mehreen Khan in Athens

The Greek government has threatened to default on its loans to the International Monetary Fund, if creditors do not release the squeeze on the government.

Greece's interior minister told Germany's 'Spiegel' magazine his country would not respect a looming €450m loan repayment to the fund on April 9, without a fresh injection of cash. "If no money is flowing on April 9, we will first determine the salaries and pensions paid here in Greece and then ask our partners abroad to achieve consensus that we will not pay €450m to the IMF on time," said Nikos Voutzis.

Alexis Tsipras's cash-strapped government has struggled to keep up with its state wage and pensions obligations alongside creditor repayments in March.

Athens insists it has enough cash to last it until the middle of April, but a final agreement on a bail-out deal is unlikely to be secured before the end of the month. Greece has been scrambling around for cash as it desperately strains to keep itself afloat. Mr Voutzis said his government would continue to pursue claims to return €1.9bn of rescue funds it says was inadvertently returned by the government to its creditors. The Greeks have also made a bid to release a further €1.2bn from the European Central Bank, from profits made on its holdings of Greek debt.

Later the government issued a statement denying that there would be any default. "There is no chance that Greece will not meet its obligations to the IMF on April 9," government spokesman Gabriel Sakellaridis said in response to the earlier comments.

Nonetheless, Mr Voutzis's comments were not withdrawn. Eurozone officials have already rejected one attempt to release the cash from the European Financial Stability Fund.

A failure to repay the IMF on time may not immediately result in an outright default to the fund, but would likely result in no further disbursement of loans until a repayment is agreed. No country has ever officially defaulted to the IMF in its 70-year history, and only the likes of Sudan, Zimbabwe and Somalia have deferred repayment and been in arrears.

Greece also faces a further €1.4bn in debt rollovers it needs to complete in April, a task which will become difficult as the ECB has moved to ban the country's banks from increasing their holdings of Greek government debt. Yesterday, Greece looked to Moscow for a cut in the price it pays for natural gas imports from Russia.

In a clear indication that Athens may be looking east rather than west for assistance, a spokesman for the government said President Putin may lift an embargo imposed on Greek food exports, the country's energy minister said.

The two countries, which are both Orthodox Christian, have traditionally had good relations and Greece has never strongly supported the European Union's economic sanctions imposed against Russia over its role in the Ukraine conflict.

Athens, which is scrambling to secure much needed financial aid from its EU partners, is seeking a further reduction in the price of gas from its biggest supplier, Russia's Gazprom, Energy Minister Panagiotis Lafazanis said.

"We are seeking lower prices for natural gas so that they reach the level paid by other European countries," he told a news conference in Athens following a visit to Moscow.

Greece's state-owned gas utility DEPA has previously negotiated with the Russian energy giant in a bid to secure cheaper gas supplies and last year clinched a deal for a retroactive 15pc price cut. (© Daily Telegraph, London)

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