Two leaked documents have shed new light on Greece's financial difficulties, one is an internal memo circulated by the International Monetary Fund (IMF), the second is a letter written by Greek PM Alexis Tsipras to IMF chief, Christine Lagarde ahead of Greece's €750m repayment to the institution last week.
The first document was seen by Channel 4 economics editor, Paul Mason. The IMF memo which is dated May 14th reads: “There will be no possibility for the Greek authorities to repay the whole amount unless an agreement is reached with international partners,” referring to its pending repayments in the coming months.
Channel 4 reports that it understands that Greece cannot afford to pay the €1.5bn due to the IMF in June without accessing new bailout funds.
The IMF specifically identifies the outstanding issues preventing a new deal as: pension reforms, the re-hiring of 4,000 former civil servants, and labour market deregulation.
It also hints towards tensions between the IMF and the EU - it warns that attempts to reach a “quick and dirty” agreement between the EU and Greece could lead to the collapse of talks as the IMF looks for a long-term solution.
The full document is included below this article.
Greek newspaper Kathimerini and the Financial Times have seen a letter written by Greek PM Alexis Tsipras to the head of the IMF, Christine Lagarde saying that Greece would be unable to make last week's payment to the IMF without additional financial aid.
Ultimately the Greeks borrowed from an emergency IMF fund to make the repayment. This meant that it was borrowing from the IMF to pay the IMF.
Bloomberg
The above Bloomberg graph outlines the challenges that Greece faces to make its debt repayments over the coming months.
Talks continue today between Greece and its international creditors - EU leader meetings in Riga on Thursday and Friday of this week are likely to be crucial if a deal is to be done before the end of May.
A spokesperson for the Greek government commented on the evolving situation this morning - the line from Athens is that it hopes to reach a deal by the end of May - and that the Greek government's red lines remain unchanged.
These are pension cuts, its growth plan, primary surplus targets and restructuring of the country's debt.
#Greece's bonds tumble on speculation banks weeks away from failure. 2yr yield jumps by 433bps http://t.co/GiFeaxv9rz pic.twitter.com/HEMIL8K0Bc
— Holger Zschaepitz (@Schuldensuehner) May 18, 2015
The spokesman also ruled out the confiscation of bank deposits or a 'Cyprus-style' Greek bailout - the mere mentioning of this scenario has caused serious market jitters, and a possible mini-run on Greek banks.
Guardian's Helena Smith reports that an official from the bank of Greece told her that, “People are taking more or less everything they have got out of their accounts for fear that the government will be dipping into them next.”
The unnamed official continues: “Many see it as the logical next step and after today’s statement we expect the outflows to increase.”
Some €35bn is believed to have been withdrawn from Greek bank accounts since last December.
