Greece is threatening to withhold payments to the IMF in in May and June. This time it does not sound like a bluff. And if it's not a bluff, we will finally know precisely when midnight occurs.

The Financial Times reports Greece prepares for Debt Default if Talks with Creditors Fail.

Greece is preparing to take the dramatic step of declaring a debt default unless it can reach a deal with its international creditors by the end of April, according to people briefed on the radical leftist government's thinking.

The government, which is rapidly running out of funds to pay public sector salaries and state pensions, has decided to withhold €2.5bn of payments due to the International Monetary Fund in May and June if no agreement is struck, they said.

"We have come to the end of the road...If the Europeans won't release bailout cash, there is no alternative [to a default]," one government official said.

Default is a prospect for which other European governments, irritated at what they see as the unprofessional negotiating tactics and confrontational rhetoric of the Greek government, have also begun to make contingency plans.

In the short term, a default would almost certainly lead to the suspension of emergency European Central Bank liquidity assistance for the Greek financial sector, the closure of Greek banks, capital controls and wider economic instability.

The government is trying to find cash to pay €2.4bn in pensions and civil service salaries this month.

It is due to repay €203m to the IMF on May 1 and €770m on May 12. Another €1.6bn is due in June.

The funding crisis has arisen partly because €7.2bn in bailout money due to have been disbursed to Greece last year has been held back, amid disagreements between Athens and its European and IMF creditors over politically sensitive structural economic reforms.

Third Bailout Needed

Greece has two major problems.

The first problem is Greece needs a third bailout even if it gets the €7.2bn in bailout money due. See Third Greek Bailout? Another €53.8 Billion Needed? Primary Account Surplus Revisited.

The vast proportion of alleged bailout money simply goes back to the Troika as interest payments. It's not Greece that's being bailed out here, but creditors.

The second problem Greece faces is it no longer has a primary account surplus. Unless Greece can remedy that by June, it will either face capital controls imposed by the ECB or it will be forced off the euro.

Midnight Hour

Meanwhile, since it is highly unlikely either side gives in this time, there is only one thing left to do: wait.