What's going on?

Greece is quickly running out of cash to pay even its most basic bills, like wages to government workers � let alone the loan it needs to pay back to the International Money Fund (IMF) on May 12th. Now, the head of the IMF, Christine Lagarde, has warned Greece that it must set aside politics and bring promised reforms to �fruition�. Otherwise Greece would run the risk of defaulting on its debt, according to an interview with�The Financial Times.

What does this mean?

The chances of Greece not paying back its loans are rising significantly, and we are likely to see a climax to this dispute in a matter of weeks, and in particular before May 12th, when the IMF loan is due to be repaid. �No developed country has ever defaulted on an IMF loan, and it is unclear how doing so would affect Greece�s status within the Eurozone.

Why should I care?

The uncertainty associated with a Greek default�would likely be a significant short term negative for financial markets. The reality is probably that the European financial system is equipped to manage a Greek default, and given the supportive economic background in the rest of Europe, any serious weakness could be a buying opportunity for stocks.