Greece Back into Junk Territory as Default Seems Imminent

International rating agency Standard & Poor’s lowered the sovereign debt rating of Greece back into junk territory on Friday. In a prolonged spat with its creditors, the country keeps refusing to engage in crucial pension and labor reforms aimed at reviving its ailing economy.

The stance of the current finance minister Yanis Varoufakis has continued to be skeptical towards the prescriptions of the country’s creditors.

Greece can not accept targets that are not realistic

Greece cannot sign the current agreement for arranging the next tranche of debt to its coffers, because it will not resolve its economic problems,” he said in Washington while attending a spring session of the International Monetary Fund and the World Bank.

In his prepared remarks for the Greek finance minister’s speech at a Brookings Institute conference, he goes on to explain that Greece cannot accept targets that are not realistic nor implement policies which are mandated by the country’s creditors.

The current Greek government does not have the political capital to pass any reforms as the majority ultra-leftist party Syriza has committed to abolish austerity measures. It has also stated that it will remain in the Eurozone, a promise which now seems less and less achievable.

The country is facing a finding crisis as creditors from the IMF and the European Union have suspended the release of the next tranche of aid until its government implements some crucial structural reforms.

In May Greece will face a scheduled debt repayment to the IMF to the tune of $1 billion. If it fails to make the payment, sources cited by Reuters say that the international crisis ender may face funding issues of its own.

Throughout the week, reports of IMF’s chief Christine Lagarde denying an extension to the Greek government were followed by Varoufakis denying that he had asked for an extension.