How close is Greece to Grexit?

The Greek government is running out of time and money. If it fails to come to a deal with eurozone partners on 24 April, there is a real chance it could default on its loans. That could push the Greek government towards leaving the single currency.

Is Greece about to default?

It feels as if we have been here before, but there is a growing belief that without a deal on Greek reforms, the left-led Syriza government will run out of cash.

Debt interest payments are piling up. It has to pay off an €80m interest bill to the European Central Bank (ECB) on 20 April and €200m to the International Monetary Fund (IMF) on 1 May.

But the one that is stirring jitters around Europe is a €760m (£550m; $810m) interest payment to the IMF that is due on 12 May.

Greece is faced with a difficult choice: either pay up its debts or continue to fund pensions and public sector salaries. Already there are reports that the Athens government has made a vain plea to delay its debt repayments to the IMF.

Can it stay afloat?

It is barely managing, denying reports that it has used reserves from the health service to help pay off its debts, despite meeting its April payment to the IMF of €448m.

For a populist, left-wing party like Syriza, swept to power on a wave of anger at austerity, it will be difficult to stop paying pensions and the decision appears inevitable. Greece has already been rescued by two EU/IMF bailouts to the tune of €240bn since 2010.

The aim of the 24 April talks is to unlock a €7.2bn bailout tranche. Even then it might still need a third bailout worth tens of billions. But if Greece's reform package fails to satisfy its creditors, there will be no new cash.

What if it does default?

Greek banks are already on life support. They are relying on €74bn in emergency liquidity assistance (ELA) from the European Central Bank.

If the government defaults on its loans, it risks cutting off its liquidity from the ECB, which is keeping both the banks and the government afloat. A "forced default" would create a downward spiral.

Tens of billions of euros have already been withdrawn from private and business accounts and deposits could leave even faster. To halt a run on the banks there might be a ban on withdrawals.

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Does that mean Grexit?

Greece's future in the euro is looking so shaky that UK bookmaker William Hill has stopped taking bets on the chances of a Grexit. And a forced default, seen as the worst possible option, could plunge Greece out of the euro.

"A forced default is where the coffers are empty, you stop paying employees and say, 'We're using all our resources to pay the hospital bills'," says Prof Iain Begg of the London School of Economics.

Greece would return to the drachma, suffer instant devaluation and inflation and there would be a banking crisis.

It could end up a pariah in the international markets for years, much like Argentina in 2002, warns Prof Begg. Greeks want to stay in the single currency, but a forced default would likely push them out.

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Is Grexit inevitable?

There could be a deal on 24 April that keeps the euros rolling in and maintains the eurozone's lifeline to Athens.

It seems unlikely although, to many observers, both sides appear to be calling each other's bluff - a high-stakes game of poker.

However, even failure to find a deal would not necessarily mean forced default or Grexit. Nor would missing its next debt payments.

For some economists, potentially the best option would be for Greece to pursue a "managed default". That could mean more relaxed and longer terms on servicing the debt on its eurozone loans.

But it could also mean Greece remaining in the eurozone with strict capital controls to stop money from flooding out of Greece.

One idea, reportedly under consideration in Germany, would be for the ECB to continue funding Greek banks while considering them in default, in return for strict guarantees for structural reform.

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