Greece Warns of Possible Default on IMF Debt Repayment in June

Greece will honour its debt repayment obligations to international lenders “to the extent” that it is able to pay, a government official said on Monday.

"It is the government's responsibility to be able to repay all these obligations ... it is also the responsibility of the creditors to be faithful to (their) loan obligations," government spokesman Gabriel Sakellaridis told journalsts in Athens.

Sakelaridis spoke a day after Greece’s Interior Minister Nikos Voutsis warned that the country has no money to repay EUR 1.6 B to the International Monetary Fund (IMF) on time next month unless it reaches a bailout extension deal with its creditors.

The payment must be made in four separate instalments between June 5-19 as part of Greece’s settlement for the bailout received in 2011.

“This money will not be given. There isn't any to be given,” Voutsis told Greek TV station Mega.

Greece’s left-wing government of Prime Minister Alexis Tsipras has ruled out a default on payment obligations to public sector workers and pensioners, saying they have first claim on the shrinking resources in state coffers.

Greece has been holding tough talks with the its eurozone partners and the IMF over the past four months, trying  to unlock some EUR 7.2 B in bailout aid to avert default.

The lenders are increasing pressure on Tsipras' government to agree to more spending cuts and economic reforms in order to secure the rescue funding but Athens claims that further austerity measures will strangle the Greek economy which is trying to emerge from one of the deepest recessions in modern times.

“There is a compelling need" for Greece and its creditors to reach a deal, Sakellaridis said.

A Greek delegation is expected to resume negotiations in Brussels on Tuesday with the heads of the institutions overseeing the aid programme of the cash-strapped country.

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