The finance ministry categorically denies an anonymous report by Reuters on issues which were supposedly discussed during the Euro Working Group on April 1,” the finance ministry said in a statement.
Greece’s appeal echoed remarks by Interior Minister Nikos Voutsis on Wednesday that the country would have to choose whether to pay back 450 million euros to the International Monetary Fund on April 9th or pay salaries and pensions. He said it would choose the latter.
The last sentence about paying salaries and pensions suggests that, if the report is accurate, that things are playing out as expected by some more savvy observers. Frank Hollenbeck and several others all noticed that Greece recently returned to having a primary surplus. That is, Greece can now pay its basic government expenses (such as salaries and pensions) but it can’t afford to pay its creditors also. So, Greece is in the position of being able to pay off the voters and domestic interest groups, and as long as it can pay them off, it may be able to risk telling the IMF and other creditors to get lost.
As Hollenbeeck noted:
Greece is actually in the driver’s seat. It is currently running a primary surplus. Historical evidence shows that once a country reaches such a situation it is likely to default within the next two years. In 1947, Time Magazine attributed the following quotation to Keynes, “If you owe the bank thousands, then you have a problem. If you owe the bank millions, then the bank has a problem.” In the current situation, it is the EU that has a problem.
So, just as predicted, Greece was back into primary surplus territory, and then it started thinking about defaulting.
