Greece to Face “Take it or Leave it Offer” Just Like Cyprus

Courtesy of Mish.

In March of 2013 the Troika gave Cyprus a “take it or leave it offer” that destroyed many savers who were foolish enough to keep money in Cypriot banks despite obvious troubles.

Given that Greece needs a third bailout, odds Greece receives a similar kind of offer increase every day.

Last week Greece averted a default on a loan repayment to the IMF only by borrowing money from the IMF to pay the IMF back. For details please see my May 12 article Greece Empties IMF Reserve Account to Pay IMF.

Next month Greece has still more payment obligations and the reserve fund is tapped out. Where will the money come from?

Take it or Leave It

The Financial Times discusses the situation in Tsipras Letter Reveals Precariousness of Greece’s Finances.

Greece came so close to defaulting on last week’s €750m International Monetary Fund repayment that the prime minister warned IMF chief Christine Lagarde he could not pay it without EU aid.

Alexis Tsipras wrote to Ms Lagarde, warning that the IMF repayment would be missed unless the European Central Bank immediately raised its curbs on Greece’s ability to issue short-term debt.

The letter, first reported by the Greek daily Kathimerini but independently confirmed by the Financial Times, raises questions about how close Athens is to bankruptcy. In addition to payments due to the IMF next month totalling €1.5bn, the Greek government has struggled to meet its wage and pension bills, which must be paid at the end of the month. The next €300m IMF payment is due on June 5.

The contents of the Greek prime minister’s letter were revealed by Ms Lagarde at a closed-door meeting of the fund’s board on Thursday.

According to officials briefed on the talks, Poul Thomsen, head of the IMF’s European department, warned the board that negotiations on the Greek economic reform package remained so unproductive that the fund could be forced to withhold its €3.6bn portion of the €7.2bn aid tranche.

Officials said Ms Lagarde fully backed Mr Thomsen, telling staff that they should not proceed with a “quick and dirty” approval process….