We will go bankrupt in a week, Greece warns creditors as trust frays in debt drama

By Mehreen Khan 02 April 2015

Athens officials say there is "no way" the country can stay float after April 9

Greece is battling to convince its creditors for rescue funds to keep them afloat after April

Greece will go bankrupt in within a week, government officials have told their creditors, as the country's bail-out negotiations push the cash-starved government to the wire.

A Greek government representative is reported to have told Eurozone officials at a teleconference on Wednesday: "there is no way we can go beyond April 9" - a reference to an impending International Monetary Fund repayment deadline. The claims were later "categorically" denied by the finance ministry.

The warning shot came as creditors failed to rubber stamp Athens' latest bid to unlock vital bail-out cash.

Greece's interior minister has already promised to postpone a €458m loan repayment to the IMF, saying the Leftist government would prioritise its payment of public sector wages and pensions rather than adhere to the repayment schedule of the Brussels Group.

A failure to pay back the Fund next Thursday would see the country fall into an arrears process that could take 30 days to register with the IMF's executive board. This would then be followed by the Orthodox Easter bank holiday weekend which runs from April 10-13.

The cash-strapped government also faces €274m in interest payments on its government debt in April.

"The visibility around the Greek government's cash position continues to decline," said George Saravelos at Deutsche Bank.

Even if the government manages to scramble enough money to make its obligations in the coming weeks, "it is highly unlikely there is sufficient cash flow to finance subsequent needs in May," added Mr Saravelos.

Greece's paymasters are continuing to demand more concrete pledges from the Leftist government after a 26-page document was sent to Brussels on Wednesday.

The draft was later leaked to the Financial Times - a move which drew the opprobrium of Greece's finance minister who attacked the Brussels Group for betraying his government's trust.

Addressing his parliament, Yanis Varoufakis said it was "unacceptable" the Greek people had to see their government's plans published on foreign websites.

“This is not our choice, we must ensure confidentiality”, he told MPs.

The proposals listed a range of revenue raising measures including tax evasion curbs, the creation of a "bad bank", and introduction of new levies on luxury goods.

In total, the blueprint aims to raise €6.1bn in 2015, while the government estimates its funding needs to be €19bn over the coming year, suggesting the debt-addled country will need more financial help after its current bail-out program is due to expire in June.

Euro group chairman Jeroen Dijsselbloem said the latest reform package came closer to meeting the assent of Greece's partners.

“They deliver more and more proposals that are more and more detailed. On some parts, we will definitely reach an agreement,” said Mr Dijsselbloem.

A working group of the finance ministers could now meet on April 8 to discuss the proposals.

The Greek finance ministry moved to clarify figures in the document which suggested it planned to hit an ambitious primary budget surplus target of 3.9pc, insisting the target remained a more manageable 1.2pc in 2015.

Any excess surplus would be used to help tackle the country's humanitarian crisis, according to a ministry spokesman.

Former European Commission head Jose Manuel Barroso also waded in to the debate, hitting back at the anti-austerity government's demands for more time and money as "completely unacceptable".

“We should remember that there are poorer countries that are lending money to Greece, so to propose a cut to their debt would be certain to receive a no from their partners," Mr Barroso told the BBC.

We will go bankrupt in a week, Greece warns creditors as trust frays in debt drama - Telegraph