Greek Economy Minister George Stathakis on Friday (5 June) said that Greeces decision to transfer all debt payments due in June to the International Monetary Fund, into one batch at the end of the month, was not a sudden decision but had been on the table for quite some time.
The decision was taken on Thursday (4 June), just hours after Prime Minister Alexis Tsipras was presented with a tough compromise deal from lenders that crossed many of his red lines including tax hikes, privatisations and pension reform.
Raising the stakes in its acrimonious negotiations with international creditors, Athens decided to postpone the payment of the €300m (£218m, $338m) loan – a highly unusual step, but one that does not yet signal a formal default.
An economic analyst at the Centre For Economics And Business Research (CEBR) said this move by Greece could be used as a negotiating tool from Tsiprass leftist-led government but also stressed the need for the debt-laden country to clinch a deal with its European and IMF lenders.
The most important thing is that its more likely to be paid overall than otherwise because it gives a negotiating hand to the Greeks because they are saying we are not going to pay it unless we are sure that we are having some money coming through, but it also highlights the need for getting a solution as quickly as possible, Vicky Pryce, chief economic adviser at CEBR said.
Athens is running out of time to clinch a deal and get desperately needed further disbursements approved by national parliaments, some of which have appeared highly reluctant to offer Greece much budget slack, before the bailout programme expires.
Greeces bailout expires at the end of June and if no cash-for-reforms deal is done by then, default would seem certain, shunting the eurozone into uncharted waters and opening the way for Greece to exit the single currency.
In a sign of growing unease among investors, the Athens stock market fell 5.16% in late trade on Friday, while yields on Greek and lower-rated eurozone bonds headed higher.
Pryce said the ongoing talks which now entered their fifth month had taken a toll on Greeces fragile economy.
The economy during those negotiations, which have taken now a very long time, has been declining and the costs to Greece of rebuilding after two quarters of new decline, which comes after having seen some improvement in 2014 or most of 2014, is going to be the most difficult task. Greece is going to need a huge amount of help, not only technical help but a lot of investment money that supposedly has been earmarked for it, it is going to also need probably another bailout and maybe an interim loan as well to see it through the next few months.
Members of the radical leftist Syriza party have called on the government to hold early elections if the countrys creditors do not soften their terms for the deal.
An opinion poll published on Friday on the website Newsit showed that three out of four Greeks wanted to stay in the 19-nation eurozone, while almost one in two was in favour of the government reaching a compromise deal.
Some 37% of people questioned in the Alco survey supported early elections to resolve the stand-off.
People are beginning to talk about the possible election maybe in early July which will hopefully - as far as Syriza is concerned - possibly strengthen their hand, especially if they get the mandate to accept some of these policies which the creditors are pushing on Greece which are quite tough, said Pryce.
Greece has received two EU/IMF bailouts totalling €240bn since 2010, when it lost access to capital markets after admitting it had issued erroneous figures for years, concealing the true scale of its budget deficit.