Knowing that a default is now inevitable, Greek citizens made a decision to stop paying taxes. The result was foreseeable: Greek Government Suffers Collapse in Revenue in May.

The Greek government suffered a collapse in revenue in May after companies and individuals delayed filing tax returns amid fears that emergency levies were imminent in order to secure a deal with bailout creditors.

The news of the sharp drop in receipts comes as eurozone finance ministers held a crunch meeting to discuss the country's bailout.

Greek government revenues in May were €900m, or 24 per cent, short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months.

But Greece still ran a primary budget surplus -- before making payments on the public debt -- amounting to €1.5bn for the first five months after slashing payments to suppliers and outlays for public investment.

"There appears to be a complete freeze on domestic payments apart from wages and pensions as the government rounds up cash to pay international creditors," a senior Athens banker said. "This is starting to have a knock-on effect on revenue collection."

A government spokesman on Wednesday denied reports Greece was considering imposing capital controls, perhaps as early as next week.

Cash withdrawals from local banks have picked up pace, with almost €2bn pulled out in the past three days, the same banker said.

"This week's gloomy scenarios have affected depositors ... We are back where we were in January [when about €10bn left Greek banks]," he said.

Capital Controls?

On one hand, we have an official denial. Please recall the expression: "Never believe anything until it's officially denied".

On the other hand, it makes sense for Greece to allow citizens to pull cash as long as the ECB does not remove ELA.

Sooner or later, either the ECB or the Greek government will impose capital controls. I suspect it will be the ECB that forces the issue.

Meanwhile, my oft-repeated message takes on increased urgency: "Get your money out of Greek banks while you still can!"