Greek debt repayments looming but running out of funds

In less than four weeks the international lifeline that has kept Greece afloat for five years is due to expire. Debt repayments are looming and the country is running out of funds.

Lenders won’t forgive Greece’s huge debts so Prime Minister Alex Tsipras must negotiate a compromise, or put Greece’s future in the eurozone at risk.
After a shaky start, his government has begun to suggest solutions. But the standoff with creditors is fueling uncertainty, shaking Greece’s fragile banking system, and could tip the economy back into recession.

The uncertainty, along with any missteps by Greece’s inexperienced leaders, could be enough to force its “accidental exit” from the eurozone.

It’s an outcome neither side wants. Here are three landmines Greece has to dodge: .

1. Debt deadlines

The first is debt. Greece needs more funds if it is to survive in the eurozone.

The bailout program — which is worth about €240 billion ($272.5 billion) in international loans in exchange for structural reforms — expires on February 28.

So what happens if Greece hasn’t reached a deal with its creditors by then?

First, it puts €7.2 billion in unpaid loans at risk, and Greece has bills to pay. There are 3 major deadlines, beginning with €1.5 billion owed to the IMF in March. Another €1.5 billion is due in June, and again in September, according to ratings agency Standard & Poor’s.

There are also two bond repayments. Greece must pay back around €3.5 billion to the ECB and its eurozone partners in July. €3.2 billion is due in August.

S&P analyst Marko Mrsnik says Greece should have enough funds for the IMF payment due in March. But the bond payments that follow will be much more difficult to meet.

2. Falling government reserves

Greece’s own coffers are emptying rapidly. The Greek government had €2.5 billion in cash reserves in September, according to the latest official data. Moody’s analyst Alpona Banerji expects those funds to have declined significantly since then.