WASHINGTON — US Treasury Secretary Jacob Lew is urging Greece to reach a deal with its creditors, warning that a default would “create immediate hardship for Greece” and damage the world economy.
Greece is in negotiations with the International Monetary Fund (IMF) and European authorities to receive the final €7.2 billion, or $7.8 billion, installment of its financial bailout. Creditors are demanding that Greece produce credible reforms before releasing the money.
The country has relied on loans from the international community since 2010. Without more bailout money, Greece could miss two debt payments due to the IMF in May and run out of cash to pay government salaries and pensions.
“It’s something that the European and global economies don’t need—to have another crisis,” Lew told reporters on Friday.
Fears that Greece could default and abandon the euro-currency group sent shockwaves through global markets on Friday. After being down nearly 360 points, the Dow Jones industrial average recovered a bit to finish down 279.47, a drop of 1.5 percent.
Lew said he stressed in a series of one-on-one meetings, including discussions with Greek Finance Minister Yanis Varoufakis, that it was urgent that the debt negotiations be resolved quickly.
The status of the Greek debt talks was a prime topic on the sidelines at the spring meetings of the 188-nation IMF and its sister lending organization, the World Bank. Those meetings were scheduled to conclude last Saturday with financial officials addressing a variety of issues—from the weak global economy to a stalled effort to overhaul IMF voting procedures. The negotiations over Greece’s debt have proved contentious. Greek officials said they planned to meet with creditors last Saturday in a search for “common ground.”
Some finance officials expressed their frustration with Greece’s new left-wing government, elected in January. Luis de Guindos, Spain’s economy minister, said the Greek government had sent “contradictory” signals regarding the negotiations.
“We have wasted very precious time over the last three or four weeks,” de Guindos said in an interview with the Associated Press. “The communication of the Greek government has not been great. They have not made a lot of friends,” he said, while adding, “I expect and I hope that the communication will improve.”