Greece Bankrupt? Says It Has No Money For IMF Payment, Needs New Deal

After years of double-digit unemployment, economic recession, and harsh austerity measures, Greece is once again unable to pay its debts, this time risking default on an International Monetary Fund (IMF) payment on June 5. The Greek government is urging compromise, but more and more commentators are saying it might be time for an EU exit.

Although many ministers are calling attention to the crisis, the most apocryphal government voice from the Greek government is likely Interior Minister Nikos Voutsis. According to Yahoo! News, he recently told the Mega TV that there’s simply no money left.

“The installments for the IMF in June are 1.6 billion euros ($1.8 billion). This money will not be given. There isn’t any to be given. This is a known fact.”

Voutsis is from the far left of the far-left Syriza party that won the last elections and took control of Greece earlier this year. Some news outlets, like the BBC, say he shouldn’t be taken too seriously. Nevertheless, even more pragmatic ministers are also saying they’re in desperate need of help.

Finance Minister Yanis Varoufakis explained to the BBC that Greece has met its creditors — the IMF, the European Union, and the European Central Bank — three-fourths of the way, but it can’t go any further without compromise.

“It is not in their interests as our creditors that the cow that produces the milk should be beaten into submission to the extent that the milk will not be enough for them to get their money back.”

For the past four months, Greece has been locked in negotiations with the IMF and other architects of the bailout to secure an additional 7.2 billion euros ($7.9 billion).

But, the institutions want to see deeper cuts and more austerity measures before they payout. Prime Minister Alexis Tsipras says Greece is at its limit and cannot take more cuts.

Also, the Syriza government came to into power promising an end to IMF-imposed austerity measures. To stay in power, Tsipras and others in his party will have to take a stand, or face an angry and increasing impoverished population.

The anger that lifted Syriza to power to fight the IMF and others largely stems from the dire economic conditions for many Greeks, and seeming negative effects of the austerity. Unemployment is over 25 percent, despite EU predictions that it would peak at 15 percent. The GDP has contracted an average of six percent per year for seven years in nominal terms according to Forbes.

Yet, for all of its cuts and savings, Greece’s debt to GDP ratios remains roughly the same as it was at the beginning of the crisis, now it just owes different creditors, like the IMF.

The desperation became apparent earlier this month when Greece was forced to raid emergency funds from the IMF to make its payment to the IMF, and pay pensions and salaries, according to Yahoo! News.

The failings of the institutions’ bailout plan has left critics, like former Fed chairman Alan Greenspan, to say a Greek exit from the EU is now just a matter of time. Warren Buffet even claimed that Greece’s leaving would make the EU stronger.

Still, Finance Minister Varoufakis insists that an exit will not be a positive thing.

“It would be a disaster for everyone involved. It would be a disaster primarily for the Greek social economy but it would also be the beginning of the end of the common currency project in Europe, whatever some analysts might be saying.”

Negotiators are working to the last second to figure out a deal for Greece, if they don’t, the country might not be able to make its IMF payment, perhaps the first in many defaults.

[Image Credit: Getty Images]