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ATHENS, Greece (AP) — Greek local authorities were on the brink of revolt Tuesday against the central government's move to use cash reserves from state agencies — including hospitals and kindergartens — to help the country make ends meet.
At an emergency meeting in Athens, angry mayors voted to defy the order to have spare reserves put in a central bank account. They also agreed to stage protests and take "every possible political and legal action" against the radical left-led government over its decision.
"Not a single municipality should deposit even one euro at the Bank of Greece," said Ioannis Lolos, mayor of the northwestern town of Igoumenitsa.
Citing an "extremely urgent and unforeseen" need for cash, an emergency government decree Monday rendered funds from state entities — such as the national opera, the national art gallery and even hospitals and kindergartens — available for short-term loans to the state. That is expected to raise up to 2 billion euros ($2.1 billion), enough to pay Greece's public debts through May.
The move, unprecedented in recent Greek history, is the latest sign that the country is running perilously short of cash amid an impasse in bailout talks with its international creditors.
Until it reaches an agreement with its creditors from the 19-country eurozone and the International Monetary Fund, Greece will not get a badly-needed 7.2 billion euros ($7.7 billion) in rescue funds, without which Athens will be unable to meet loan obligations this summer.
A senior European Union official said Tuesday that reform talks are "where ideally I think we would have wanted to find ourselves two months ago."
Eurozone members had agreed that Greece should finalize its reform plans by the end of this month. Their finance ministers, known as the eurogroup, want to assess progress at a meeting in Latvia on Friday. But technical talks aimed at establishing what those reforms are have borne little fruit.
The senior official said there has been "a clear pick-up in engagement but we are a significant way from being able to signal that a result is in sight." The official works closely with the eurogroup but is not allowed to speak publicly about its procedures.
Greek Finance Minister Yanis Varoufakis voiced confidence that an agreement will be eventually reached, saying there is "clear convergence" in the negotiations and that "a non-agreement would be disastrous for all of us."
"This doesn't mean that there will necessarily be a solution during Friday's eurogroup ... but I think it will be a very important step toward concluding the negotiations," he told reporters in Athens Tuesday.
Asked about Greece's cash crunch, Varoufakis insisted that he is not in a tearing hurry to receive the frozen rescue loan payment.
"This government doesn't set the next installment above everything," he said. "What we do consider paramount is to obtain an agreement that will truly stabilize the economy, once and for all, and kick off the growth process."
Greek Prime Minister Alexis Tsipras will meet Angela Merkel, the chancellor of Germany — a major provider of rescue loans and staunch proponent of Greek austerity — on the sidelines of Thursday's EU summit in Brussels on migration, his office said.
Creditors are demanding reforms that include sweeping changes to pensions and labor rules. Tsipras' three-month-old government has ruled out many key demands, arguing that it was elected to end the kind of stifling budget austerity that worsened a deep recession.
Greece has depended on rescue loans since it lost market access in 2010 and nearly went bankrupt. In exchange, successive governments adopted deeply resented spending cuts and tax hikes, as unemployment climbed to record high levels — it has since dipped to 26 percent late last year — and incomes dropped by about a third.
The current impasse has revived fears that Greece will soon find itself unable to pay salaries and pensions or service its debt — it has to repay nearly 1 billion euros to the IMF in May — and have to leave the euro currency.
The government has indicated that it could seek alternative means of financing outside the EU, and on Tuesday Tsipras held talks in Athens with the head of Russia's Gazprom energy giant, Alexei Miller. Greek officials said talks on potential Greek participation in a new Russian gas pipeline to Europe are "at a good point" and will continue with a view to being concluded "soon."
Greek shares fell for a second straight day Tuesday, with the Athens Stock Exchange general index closing 3.3 percent lower.
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Lorne Cook in Brussels contributed to this report.
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