End game approaches as US warns of accidental Grexit

THE International Monetary Fund (IMF) pulled out of talks with Greece last Thursday after it accused the country's government of failing to compromise in key areas, including labour market and pension reforms. The news comes a day after Standard & Poor's downgraded Greece's credit rating on Wednesday one notch further into junk territory from "CCC+" to "CCC". The rating agency's move follows Athens' decision to postpone a 300 million euro (S$454 million) instalment due in the first week of June to the IMF and bundle it with others due this month into a single 1.6 billion euro payment due to the IMF at the end of June. The downgrading came the same day that Greek Prime Minister Alexis Tsipras met again in frenzied diplomacy with key European leaders, including German Chancellor Angela Merkel and French President Francois Hollande.

It is reported that Mr Tsipras has asked Greece's creditors for a nine-month extension of its current bailout package until March 2016. While this would "buy time" for the new left-wing government which has been in crisis mode since its election in January, it would probably only defer a potential crisis for a few months.

The decision of the IMF team to pull out of talks comes at a time that there had been signs of a potential breakthrough deal. Dutch Finance Minister Jeroen Dijsselbloem appears to still believe that a deal could be reached by June 18 when the Eurogroup of finance ministers he chairs next meets in Brussels.