Greek Tax Flow Collapse

Greece’s public finances could collapse as early as next month, leaving salaries and pensions unpaid unless a stable government emerges from the June 17 election, according to Lucas Papademos, the technocrat prime minister who left office after this month’s inconclusive vote.

Papademos warned that conditions were deteriorating faster than expected with cash flow likely to turn negative in early June amid a sharp fall in tax revenues and a loosening of spending controls during two back-to-back election campaigns. Mounting anxiety that Greece is headed for further political instability and a possible exit from the euro has prompted many Greeks to postpone making tax payments ,reports FT.

The looming cash crunch was revealed on Sunday in an eight-point document published by the Greek newspaper To Vima.

The ECB will step in to prop up Greece in the very short-term, with the likelihood that Greece will replace the euro with a new drachma within weeks.