Greece continues to be in danger of running out of cash and declaring bankruptcy. Last week, the country made a payment to the International Monetary Fund (IMF) with hours to spare – by raiding its own emergency reserves held by the organisation.
Greece sold just over €1m of three-month paper last week as domestic banks, in turn propped up by the European Central Bank, came to the rescue. Now the spotlight has shifted to the next IMF repayment – a €300m tranche due on 5 June. There is still no sign of a breakthrough in talks with creditors to unlock several billion euros of bailout funds.
“Given [Greece’s] ability to keep pulling rabbits from hats”, as IG’s Chris Beauchamp puts it, it could squeeze past the June deadline, but it seems unlikely to get much further. Reports suggest “it was very close to defaulting on its IMF payment last week”, says Simon Smith of Fxpro.com, and there is now talk of giving Greece a “take-it-or-leave-it ultimatum”.
Today’s summit in Riga will offer another chance to make progress. But if a deal isn’t struck by the end of May, “it is truly game over”, according to zerohedge.com. Syriza’s Alexis Tsipras could soon go down in history “as the PM who sent Greece careening into a drachma death spiral”.