As Greece's creditors line up to oppose the country's demand fora debt restructuring, Prime Minister Alexis Tsipras's refusal to accept more bailout loans may result in a cashcrunch as early as next month, two people familiar with thecountry's financial position said.

Unless the 15 billion-euro (US$17 billion) limit on short-termborrowing set by Greece's troika of official creditors is raised,the government may run out of cash on Feb. 25, said one of thepeople, who asked not to be named because the figures areconfidential. Three weeks ago, international officials reckonedGreece could hang on until mid-year.

With Greeks yanking their cash from banks and withholding taxpayments, Tsipras would only be able to survive for a few moreweeks by tapping social-security funds and withholding payments tovendors, the person said. By the end of March he may faceexistential choices: accepting a lifeline with conditions he hasconsistently rejected or abandoning the euro.

Finance Minister Yanis Varoufakis travels to Berlin Thursday forhis first meeting with his German counterpart, Wolfgang Schaeuble,with the time he has to negotiate running out. The Germans, bycontrast, have all the time in the world.

Chancellor Angela Merkel expectsthe Greeks to meet their existing commitments to the rest ofthe euro area, and she's prepared to wait until May for Tsipras tofold, a person familiar with her thinking said Tuesday.

“The financial markets' recently more relaxed attitude to theGreek problem is hardly justified,” Stephen Lewis, an economist atADM Investor Services in London, wrote in note to clients. “If theGreek government entertains no prospect of agreement with itscreditors, it is unlikely to stand by until the end of the monthand then see what happens.”

In similar situations throughout the crisis, which struck in2010, Greece has met its obligations by issuing short-term bills tolocal banks, which pledged them to the European Central Bank (ECB)as collateral. Now Tsipras is running up against the limits of thatapproach, which the ECB Governing Council considered in a meetingWednesday.

Varoufakis also met with ECB officials in Frankfurt onWednesday. ECB President Mario Draghi told the Greek finance chiefhe needs to talk to the troika, which oversees Greek compliancewith the bailout's terms, and made no offer about raising thecentral bank's own limits on collateral, according to a personbriefed on the meeting.

“We established an excellent line of communication that gives mea great encouragement for the future,” Varoufakis said after themeeting.

Varoufakis is going to need more than encouragement from thepolicy makers in Frankfurt and Berlin.

Demand for Greek bills was weaker than at any point in thecrisis at the government's auction on Wednesday, the first sinceTsipras's election victory.

That echoes the deposit flight afflicting lenders. Greek bankslost at least 15 billion euros in deposits in the two months beforethe election, about 9 percent of the total.

Beyond that, the ECB is reaching its limit for funding Greekbanks.

Greek banks have maxed out the 3.5 billion-euro limit on thetotal amount of treasury bills the ECB will accept as collateralfrom them. The ECB supervisory chief, Daniele Nouy, has written tobank executives advising them not to invest their liquidity inassets that the central bank won't accept.

The squeeze is getting worse because the change of governmentand a looming standoff with the troika persuaded many to hold offpaying their taxes, according to a troika official. In part that'sbecause of Tsipras's policy proposals. During the campaign, hepledged to replace property levies with a wealth tax and to raisethe income-tax threshold. So some, reckoning their tax bills mightbe cut, opted to avoid paying altogether.

Tax revenue fell short of government forecasts by 1.3 billioneuros in December, according to finance ministry data.

Cash Hopes

The government's coffers are set for a 641-million-euro boostthis quarter from a Bank of Greece dividend and cash-back from itsinvestment in Greek bonds. The government can also tap at least 625million euros in its bank recapitalization fund, the personsaid.

But this still won't be enough to meet end-of-March obligationsif the stock of treasury bills doesn't increase, he said. Withouthelp from the ECB, the government will be 4 billion euros short,the person said.

To stay liquid, Greece needs the troika to lift its 15billion-euro cap on the amount of short-term debt it can issue, andit needs the ECB to lift the 3.5 billion-euro limit on the volumeof bills it will accept from Greece as collateral.

The funding limits give “the power to the ECB to turn offliquidity and effectively impose Grexit,” Nicholas Economides,professor of economics at Stern School of Business in New York saidin an email, referring to a Greek exit from the euro. “Greece is in very deep waters.”

Euro region finance ministers are due to meet Feb. 16 inBrussels when Greece's plight is likely to dominatediscussions.

–With assistance from Christos Ziotis and Marcus Bensasson inAthens, Jeff Black in Frankfurt and James Hertling in Paris.

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