Greece issues fresh warning on IMF payment in June

A Greek government minister said Sunday that Athens will be unable to repay the IMF on schedule next month, reiterating previous warnings by officials during tense talks with the country's creditors.

"The instalment to the IMF won't be paid," Interior Minister Nikos Voutsis told Mega TV.

"The instalments for the IMF in June are 1.6 billion euros ($1.8 billion). This money will not be given. There isn't any to be given. This is a known fact," he said.

Voutsis added however that the negotiations between Athens and its creditors were taking place "on the basis of cautious optimism that there will be a strong agreement".

Greece faces four debt repayments to the IMF from June 5. Athens would struggle to meet all of them without using bailout funds due to it that are being blocked by its international creditors.

A failure to honour the repayments could result in default, raising the spectre of a possible exit from the euro.

Last week, the parliamentary spokesman for Greece?s ruling Syriza Party said that the government cannot repay a loan to the IMF on June 5 as its priority is to pay salaries, pensions and running costs.

"No country can repay its debts with only the money from its budget," Nikos Filis told Ant1 television.

Finance Minister Yanis Varoufakis, speaking to the New York Times, also raised the prospect.

"I am not going to pay the IMF (International Monetary Fund) and not pay pensions in the next few weeks. So I said to them: 'Decide. Do you want this to be a proper bargaining round, or do you want this to be a post-mortem?'", he said with his trademark outspokeness.

Government spokesman Gabriel Sakellaridis was less confrontational on Friday however.

"The Greek government's plan is to cover all its requirements. With a priority on domestic requirements and then requirements towards the creditors. The government plans to respond to all the needs. This it has proven with great toil and under extremely difficult and trap-filled conditions this past period. This is what we will do in June," he said.

The Syriza-led government is locked in talks with the European Union, European Central Bank and the International Monetary Fund to release a blocked final 7.2-billion-euro ($7.9 billon) tranche of its 240-billion-euro bailout.

In exchange for the aid, creditors are demanding Greece accept tough reforms and spending cuts that anti-austerity Syriza pledged to reject when it was elected in January.

According to reports, creditors are demanding further budget cuts worth five billion euros including pension cuts and mass lay-offs.