Nobody is exactly sure when the Greek government will run out of cash to service its obligations – not just loan repayments, but the other cash requirements of a modern nation for public salaries and pensions, imports and so on. However, the cash reserves will be depleted in days or a few weeks and not months. If Greece is not to suffer a sovereign default, then it needs to obtain financial help from its partners without delay. Whilst the nation has been able to go to the markets for some borrowing on very short-term sovereign bonds, the interest payments have been expensive. At the moment, it would be hard to imagine that creditors will be willing to purchase five or ten year bonds and the yields are already prohibitively high (but substantially less than the rates demand prior to the first Greek bailout in 2010). The yield on Greek 10-year bonds is currently 13%.
In a sign of the increasing desperation that the Greek government is clearly feeling, it has asked public sector bodies to return any cash reserves that they may be holding to the central government. It hopes that this may net something like €3 billion, but then the public sector bodies will be largely denuded of the cash they need to operate, one assumes. For it to become compulsory, a bill would need to secure parliamentary backing.
Greece is facing some looming dates for repayments that must be made in order to avoid sovereign default; €1 billion is due to be repaid to the IMF next month.
President of the ECB, Mario Draghi noted that much work remained to be done before release of the final tranche of bailout money, €7.2 billion, could be released: "More work, much more work is needed now and it's urgent. We all want Greece to succeed. The answer is in the hands of the Greek government."
Despite being elected on a platform which promised halving the nation’s debt burden, Greek officials have been at pains to express their nation’s commitment to honour all its obligations. However, it is abundantly clear that this will not be possible unless Greece does enough to garner the support of its Eurozone partners. For their part, they have made it clear that release of the final payment will only happen when Greece commits to tangible reforms – ending the austerity programme and refusing to allow the Troika to have any further say on Greek affairs was also central to Syriza’s victory in January.