Watch CBSN Live

Greece: Bailout deal needed by the end of May

ATHENS, Greece - Greece's cash-strapped government signaled Monday it needs a deal with bailout lenders by the end of the month to avoid defaulting on its debt this summer, as renewed concern rattled the country's finance markets.

"We have demonstrated that we can repay our (debt) obligations so far -- with great difficulty, we are not hiding this," government spokesman Gabriel Sakellaridis said.

He said Greece aims to keep honoring its debt obligations in coming months but to do so it needs more financial assistance.

As a result, he expects a deal with creditors "by the end of May."

Uncertainty over Greece saw the interest rate on the government's two-year bonds -- a gauge of default risk -- surge about 3 percentage points on Monday to above 24 percent, while the Athens Stock Exchange dropped nearly 2 percent in midday trading.

Greece's creditors want the country to agree to a series of economic reforms before giving the country the final installment of its bailout plan, worth 7.2 billion euros ($8 billion).

The new left-wing government is proposing measures that might protect Greeks hammered by a six-year recession, but lenders say they remain too vague.

Athens has already pooled cash reserves from schools, hospitals and local government to fund the state's debt payments. And Sakellaridis confirmed the government this month used a reserve account with money in a currency unit used by the IMF to repay a loan to the Fund.

Sakellaridis also insisted Greece would not accept a one-off bank deposit levy to resolve the cash crisis -- a similar measure had been used in eurozone member Cyprus two years ago.

In Spain, meanwhile, the country's conservative economy minister said he was confident an agreement will be reached in the coming days.

Speaking at a business breakfast Monday, Luis de Guindos said Greece an agreement was imperative given Greece's financial difficulties.

He said he was not aware of any alternative emergency plan should an accord not be reached.