Greek shares drop despite pledge to keep paying IMF
Stocks in Athens sank three per cent yesterday despite the government reiterating that it would meet its intention to pay its creditors on time.
The euro also sank to a one-month low against the dollar, trading at $1.097 last night.
At the weekend one of the country’s ministers claimed that Greece would refuse to – and would be unable to – pay the International Monetary Fund (IMF) €1.6bn (21.14bn) that is spread over four payments between the 5 and 19 June, should Greece fail to agree terms for extra bailout cash.
“This money will not be given and is not there to be given,” interior minister Nikos Voutsis told Greek TV.
But other officials are confident that Greece will receive further funding and meet the IMF payment. “The government still believes it will be able to pay both and that there will be an agreement ahead of that,” a finance ministry spokesman told City PM yesterday.
While not confirmed, there could be a Euro Working Group scheduled for this week, he added.
A Euro Working Group is a meeting of deputy finance officials from Eurozone countries. If they deem that enough progress has been made in negotiations between technocrats, then a Eurogroup meeting, involving Eurozone finance ministers, will be called. A Eurogroup meeting is needed to decide whether or not to release funds to Greece.
The government will hope these sets of meetings can be concluded before next Friday when Greece is set to pay €306m to the IMF.
Talks between technocrats from Greece and its creditors – the IMF, the European Central Bank and the European Commission – will resume today. Government spokesman Gabriel Sakellaridis also insisted yesterday that Greece will strike a deal in time, and that there was “absolutely no possibility of capital controls” to stop money flowing out of the country. Investors have been spooked by the prospect of capital controls.
Sakellaridis also admitted yesterday that there is a “compelling need” to wrap up negotiations which have dragged on for the last four months.
Meanwhile, chief IMF economist Olivier Blanchard told French newspaper Les Echos that Greece’s budget proposals are not enough to ensure a surplus this year.