Greece will default on its June payment to the International Monetary Fund(IMF) if it cannot reach a deal with its creditors, according to Interior Minister Nikos Voutsis.
“The four installments for the IMF in June are 1.6 billion euros. This money will not be given and is not there to be given,” said Voutsis.
Greece has been without bailout assistance from the EU and IMF since August and is now scraping the bottom of its financial barrel.
On Monday, Greek Prime Minister Alexis Tsipras called an emergency meeting of his negotiating team, where he instructed them that Greece should honor his debts, although how this will be accomplished is still unclear.
Despite accusations of giving into austerity thinking, Tsipras received the backing of his party, Syriza, and its 350 member central committee.
However, Syriza agreed that should it come down to it, paying pensions and public sector wages would take priority if Greece can’t pay its bailout obligations.
“Our commitment above all is to protect workers and pensioners who have been the victim of austerity,” said one Syriza member.
On the other side of the negotiating table, the IMF is pushing Greece for pension reform and a budget surplus of 3% before releasing anymore bailout funds.
“Considering that the most recent estimates mention a substantial budget deficit, we need credible measures to transform this into a surplus and maintain this surplus in the future,” said Olivier Blanchard, the IMF’s chief economist. “This is far from being the case at the moment.”
Prime Minister Tsipras has said that any surplus above 1.5% that is achieved through austerity, will worsen his country’s battered economy.
“We are seeking a deal that will give prospect to the country and will take it out of the cycle of austerity and recession,” said Greek Interior Minister Voutsis. “There is not going to be a second generation of compromise, concessions and austerity measures.”