Greece says it needs bailout deal by end of May, as cash crisis rattles markets

ATHENS, Greece – Greece’s cash-strapped government signalled Monday it needs a deal with its bailout lenders by the end of the month to avoid defaulting on its debt, as renewed concern rattled the country’s finance markets.

For almost four months, Greece has been haggling with its creditors over what economic reforms it must make before it can get the final installment of its bailout plan, worth 7.2 billion euros ($8 billion).

It has survived the last few weeks by scraping together cash from reserve accounts, but admits it is running out of options as key debt repayments come due next month.

“We have demonstrated that we can repay our (debt) obligations so far — with great difficulty, we are not hiding this,” government spokesman Gabriel Sakellaridis said.

To honour its debt obligations this summer, Greece needs more financial assistance, he said. As a result, Sakellaridis expects a deal with creditors “by the end of May.”

Uncertainty over Greece caused the interest rate on the government’s two-year bonds — a gauge of default risk — surge about 3 percentage points on Monday to above 24 per cent, while the Athens Stock Exchange dropped nearly 2 per cent in midday trading.

In the talks, Greece’s left-wing government is proposing reform measures that might protect Greeks hammered by a six-year recession, but lenders say they remain too vague.

Athens has already pooled cash reserves from schools, hospitals and local government to fund the state’s debt payments. And Sakellaridis confirmed the government this month used a reserve account with money in a currency unit used by the IMF to repay a loan to the Fund.

Sakellaridis also insisted Greece would not accept a one-off bank deposit levy to resolve the cash crisis — a similar measure had been used in eurozone member Cyprus two years ago.

In Spain, meanwhile, the country’s conservative economy minister said he was confident an agreement will be reached in the coming days.

Speaking at a business breakfast Monday, Luis de Guindos said Greece an agreement was imperative given Greece’s financial difficulties.

He said he was not aware of any alternative emergency plan should an accord not be reached.


Ciaran Giles in Madrid contributed to this report.