London - The Greek prime minister held talks with Angela Merkel on Thursday amid fears that his country could go bust as early as next week.
The salaries and pensions of millions of Greek public sector workers are due at the end of the month. But the country’s deputy finance minister admitted on Wednesday that the government could not pay its bills.
Dimitris Mardas said treasury coffers were 400 million euros short of the 1.9 billion euros needed to honour payroll obligations to state employees, adding: “We have been running on empty since February.”
And in a sign of how desperate things are getting, the lights went out on Thursday in Greece’s biggest tax office near Athens, after the finance ministry failed to pay long-overdue power bills. At a summit in Brussels which was held to discuss the migrant crisis, Greek prime minister Alexis Tsipras appealed to the German Chancellor for more eurozone aid - warning her that without it, his country could be forced out of the euro.
To avoid default, Athens must pay the International Monetary Fund and eurozone creditors before its own public sector workers. But EU diplomats and officials are concerned that left-wing Tsipras will choose to pay public sector workers rather than honour payments due to the IMF of 970 million euros over the next three weeks. One diplomatic source told the Times: “There is a strong faction, including the finance minister, that will not stomach the humiliation of paying back foreign creditors while Greeks go hungry. This might well be the moment it ends.”
Merkel was expected to stress at the meeting that she wants to keep Greece in the single currency area and avoid a catastrophic default, but press Tsipras to move faster to agree economic reforms which would help unlock international bail-out funds.
On Thursday a senior official said: “At the highest level, the Germans want to keep Greece in the euro area and find a solution, but time is running short and there may have to be more drama before Tsipras can put his foot down and reach an agreement.”
Daily Mail