Greece mulls debt default if talks with creditors fail: FT

April 14, 2015 09:02
Greek Prime Minister Alexis Tsipras says his government still hopes to reach a ‘mutually beneficial solution’ with creditors. Photo: Reuters

Greece is preparing to declare a debt default if it cannot reach a deal with its international creditors by the end of April, Financial Times reported Monday, citing people familiar with the matter.

The radical leftist government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold 2.5 billion euro of payments due to the International Monetary Fund in May and June if no agreement is struck, the report said.

"We have come to the end of the road . . . If the Europeans won’t release bailout cash, there is no alternative [to a default]," a Greek government official was quoted as saying.

In the short term, a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability, FT said.

However, the paper noted that the warning of an imminent default could be a negotiating tactic aimed at extracting the easiest possible conditions from Greece’s creditors.

Meanwhile, the Greek government denied that it was preparing for a debt default.

"Greece ... is not preparing for any debt default and the same goes for its lenders. Negotiations are proceeding swiftly towards a mutually beneficial solution," Reuters quoted Prime Minister Alexis Tsipras' office as saying in a statement.

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