Greece dodges economic bullet but cash may run out in two weeks

Greece dodged an economic bullet by persuading an increasingly-skeptical German-led bloc of creditors that it's serious about delivering the tight-budget policies needed to escape a default. However the country's financial situation is still "terribly urgent" Finance Minister Yanis Varoufakis said.

Less than three weeks after a Greek aid meeting broke up in taunts and acrimony, Mr Varoufakis assured creditor governments that Greece is ready to make concessions to win the final installments of its €240 billion aid program.

"We are making faster progress," Dutch Finance Minister Jeroen Dijsselbloem told reporters in Brussels after chairing a meeting of euro ministers. "Some important issues have now been discussed in depth but more time is needed to bridge the remaining gaps and to reach a comprehensive agreement."

It wasn't immediately clear whether the tepid endorsement will encourage the European Central Bank to maintain in full the emergency liquidity lines that are keeping the Greek banking system in business.

The ECB is due to review the funding arrangements this week, with some Governing Council members advocating increasing the discounts that Greek banks take on collateral they post. Greece said it will surmount another hurdle Tuesday, when it repays about €750 million to the International Monetary Fund. A transfer order was put in today, two Greek officials said.

More payments to the IMF and the redemption of bonds held by the ECB beckon between now and September, forcing Greece to constantly scramble for cash.

Mr Varoufakis suggested Greece may not get that far without help. “The liquidity issue is a terribly urgent issue,” he said. “We are talking about the next couple of weeks”.

Bloomberg