Can Greece Pay Its Debts and Avoid Financial Armageddon?

Cash-strapped Greece is sending out mixed messages on its ability to pay back its loans, with a leading official saying they don’t have the money to make a June 5 repayment to the International Monetary Fund (IMF).

According to the above video, Greece’s interior minister, Nikos Voutsis, said: “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.”

But a day after this statement, government spokesman Gabriel Sakellaridis on Monday told reporters that Greece will continue repaying its creditors for as long as possible.

“To the extent that we are able to pay, we will keep on repaying these obligations,” Sakellaridis said, according to AFP.

“It is the government’s responsibility to be able to repay all these obligations…. It is also the responsibility of the creditors to be faithful to [their] loan obligations.”

To avoid what commentators say would be a disaster, the far left Greek government has been in talks over the past four months with its euro zone partners and the IMF. The Greeks are hoping they can somehow seal a deal that will result in them having access to 7.2 billion euros ($7.9 billion) in remaining aid so they can avoid bankruptcy, reports Reuters.

To secure the funding, the Greeks are being put under pressure by their creditors to put in place more cuts and reform.

Austerity measures in the past have resulted in public protests and riots.

A policeman walks past a burning television broadcast van during riots at a May Day rally in Athens May 1, 2010.  (Joanna/Flickr)

A policeman walks past a burning television broadcast van during riots at a May Day rally in Athens on May 1, 2010. (Image: Joanna/Flickr)

Greek Prime Minister Alexis Tsipras has said that his government is close to agreeing on a deal, but added that Greece would not accept “humiliating terms.”

Tsipras has been having to deal with the more radical factions of his government in dealing with the issue.

Greek Prime Minister Alexis Tsipras. (Matthew Tsimitak/Flickr)

Greek Prime Minister Alexis Tsipras is now caught between a rock and a hard place. (Image: Matthew Tsimitak/Flickr)

The country’s energy minister, Panagiotis Lafazanis, said his government must prepare the Greek people in case there is no deal in the coming days that is compatible with its promises.

“The so-called institutions in the last four months have applied a drip-feed torture on the Greek people, one of the most horrible blackmail practices in world history, at the expense of the country,” he said, according to Reuters.

If the talks fail, then it could result in Greece leaving the euro zone and reverting to its old currency—the drachma.

This would be “catastrophic,” said Yanis Varoufakis, the Greek finance minister, according to the UK’s The Telegraph.

“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe,” he said.

“Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the euro zone is not indivisible,” he added.

It will only be a certain amount of time before the whole thing begins to unravel.

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