(VOVworld)- Greece’s central government has run out of money to pay debts now falling due. Meanwhile, negotiations for an aid package from the International Monetary Fund, the European Central Bank and the European Union, are deadlocked. Greece’s position in the Eurozone is worse than it has ever been.

The European Central Bank announced Wednesday that it will continue to fund Greek banks as long as they stay solvent and have sufficient collateral. General Director of the International Monetary Fund Christine Lagarde said the IMF will not extend the deadline on Greece’s its debt of 2.5 billion euros due in May. The creditors held back their bailouts for Greece amidst disagreements over Greece’s politically sensitive economic reforms and the lack of progress in strengthening its private sector and cutting its national budget. An empty treasury and difficult demands from creditors have raised the spectre of imminent bankruptcy.

Greek Prime Minister Alexis Tsipras

Greece’s economy has reached a dead end

Greece’s government just issued a decree requiring local administrations and public entities to transfer cash from their reserve funds to the central government to keep the country afloat. Greece needs more than 3 billion euros to cover immediate expenses like wages, social insurance, interest payments and debts falling due. Over the past 6 years of crisis, Greece has never before applied such a drastic measure. This move shows a Greek government at the end of its rope with an empty treasury and the clamor of creditors mounting. Though it still needs Parliament’s approval, the decree could be the “straw that broke the camel’s back” after years of austerity.

Local administrations are outraged by the decree saying it’s unfair and unacceptable for the government to hijack the funds of local administrations. They say the decree may lead to the suspension of their operation. In addition, the transfer of local reserves all over Greece to the Central Bank may trigger financial chaos. The Greek securities index has already fallen 3.3%. The Greek government insists that the cash transfer is a short-term debt that the government will repay within 15 to 20 days. But, it hasn’t specified how it will do that.

Future scenario for Greece?

European Finance Ministers will gather in Latvia on Friday to discuss another bailout for Greece. So far, Greece has failed to submit an economic reform plan to justify the 7.2 billion euro bailout proposed as part of the 240 billion euro package that the EU and IMF agreed in 2010. The European Union wants Greece to do more to reform its economy but the Greek government hasn’t cut public spending and is instead trying to increase its revenues through increased taxes.

Since it assumed power, Greece’s Syriza Party has been under pressures. Syriza promised to get Greece out of its economic crisis and keep it in the Eurozone, but this promise now appears to be fading. The Syriza Party is now planning to join with two smaller parties in a coalition government to maintain its majority in the parliament against leftists who want Greece to leave the Eurozone. A new coalition government can reset Greece’s representation in the Eurozone and the International Monetary Fund. It will be much more difficult to reset the Greek economy.