Greece triggered the procedure on Monday (May 11) to pay 750 million euros to the International Monetary Fund (IMF), while its Eurozone partners have once again asked Greece for “more effort.” The Greek Finance minister Yanis Varoufakis warned his country is two weeks ahead of a cash crisis.
The payment order to the IMF was given a day ahead of a payment deadline to the Greek debt agency and is to become effective on Tuesday (May 12).
This move ended days of uncertainty, since the EU partners were worried about the fact that Athens could have used this reimbursement as a bargaining chip in the ongoing negotiations with its creditors, the European Union and the IMF.
The Greek government has repeatedly assured that it would continue to “honour its obligations,” explained Varoufakis. But he warned that Athens will be short of cash in two weeks. “The issue of liquidity is terribly urgent. Everybody knows, it’s not worth beating around the bush,” he told reporters in Brussels.
An agreement on a reform plan should be found “before end of June,” the scheduled date of the next Eurozone meeting, said EU Commissioner Pierre Moscovici, in charge of economic affairs.
Remaining gaps
After their meeting Monday, the Eurozone finance ministers “welcomed the progress” made in the negotiations between the Greek authorities and their creditors. Compared to their previous meeting in Riga in late April, the mood has changed and this is certainly the consequence of the new Greek team involved in the negotiations.
In a short statement at the end of the meeting, Jeroen Dijsselbloem, president of the Eurogroup, said that the new set-up of the negotiations is “more efficient, more positive, more constructive, we are making faster progress.” But he added that “more time is needed to bridge the remaining gaps and to reach a comprehensive agreement.”
The Greek government is defending a proposed balanced budget in 2015 thanks to greater tax revenues, including the introduction of VAT on purchases of tourists on the Greek islands.
But the IMF and the EU dispute the level of these tax revenues and require further reforms like the liberalization of the labour market and pension reform, two red lines on which Greek Prime Minister Alexis Tsipras is not willing to move.
- Author: Jean-Michel Bos
