Greece will make its €301 million payment to the International Monetary Fund next Friday, according to Greek Finance Minister Yanis Varoufakis, cutting the growing speculation that Athens would fall short and even default.
Asked by reporters in Athens if Greece would pay, he responded, “Of course, because there will be a deal by June 5.”
Jean-Claude Juncker, the European Commssion president, also thinks the chance of a resolution appears a bit brighter.
“My impression after talking to a series of colleagues is that the feeling is growing that a default should be avoided,” he told the MNI news agency. “The Greek colleagues have to know that we think they have to pay in June.”
The comments Tuesday mark what is becoming a common routine in the Greek saga. Athens and its creditors swing wildly between gloom that Greece has finally run out of cash and more optimistic pronouncements that four months of negotiations are making progress.
This past weekend was heavy on the gloom scenario. Greek politicians took to local television claiming that the International Monetary Fund will not get repaid June 5 when the next bill comes due. They did it a couple of days ago, just as they had earlier in May, only to make the payments and avoid default.
“This money will not be given and is not there to be given,” Greek interior minister Nikos Voutsis said on Greece’s Mega TV.
Voutsis, who actually doesn’t have any sway over Greece’s economic policy, said Greece won’t be able to repay the IMF the €1.5 billion it owes through June. The comment followed earlier statements by the ruling anti-austerity Syriza party that Greece won’t be able to make the June 5 payment without help from its creditors.
Varoufakis, who does have a lot to say on the issue, appeared on the BBC over the weekend and sounded slightly more upbeat, saying that Greece has made “enormous strides” in talks with its creditors. But he too warned that the point was coming when “we are not going to be able to do it” and the repayments will stop.
He said Greece’s European partners are fooling themselves if they think that Greece’s exit from the eurozone and the chaos that results from a return to the drachma would be anything but “catastrophic.”
It would be “a disaster for everyone … the beginning of the end of the common currency project,” Varoufakis said.
Those gloomy noises are also raising fears over the stability of the Greek banking system. Deposit outflows slowed in March to only €2.5 billion from 10 times that amount in the first two months of this year. But any signal that a Greek departure from the eurozone is becoming probable could spur another rush for the exits as bank customers shift their savings to safer countries.
Speaking on Greek television Monday, a former opposition foreign minister, Dora Bakogiannis, warned that if Greece doesn’t quickly strike a deal with its creditors then capital controls could be imposed as early as this weekend. Government spokesman Gavriil Sakellaridis called the idea “ridiculous,” saying that the possibility of capital controls “simply do not exist.”
After months of talks, Greece’s government still has not reached a point at which the remaining €7.2 billion in an earlier loan package can be released and negotiations can start on a third bailout that could finally end the Greek crisis.
“We have met them three quarters of the way, they need to meet us one-quarter of the way,” Varoufakis told the BBC.
But that isn’t entirely the case. Creditors have already loosened some of their goals, namely the size of the budget surplus that Greece would have to run in the next years. There appears to be no flexibility on allowing the Greek government to backtrack on earlier austerity promises by increasing the minimum wage and keeping up labor protection regulations, but those issues go to the heart of the promises Syriza made to its voters in elections earlier this year.
“We are prepared to bargain all the way to the wire,” Varoufakis said.