Post originally appeared on Keep Talking Greece.
Greece cannot and probably does not want to make the €3oo-million pay to the IMF tomorrow, Friday, June 5th. Thursday afternoon the Bank of Greece submitted a request to the International Monetary Fund asking to be able to bundle all four June payments into one.
Greece’s obligation to the IMF in June sum up into €1.5 billion with the four tranches to be due June 5th (€300 million), June 12th (€350million), June 16th (€560million) and June 19th (€350million).
The option to bundle together tranches to the IMF is perfectly conform with the Funds’ rules, terms & conditions, provided that the payment will be done by the end of the month. Only then the missing of payment is not considered a “credit event”.
The Greek request to the IMF has not been officially confirmed by the Greek government but all Greek media report about it citing “government sources.”
However it was the IMF that confirmed the news through its spokesman Gerry Rice,
“Greek authorities informed the IMF that they plan to bundle the four June payments into one. The deadline for the payment is June 30th.”
There has not to be an IMF decision to approve the request.
The Greek decision comes as surprise because since late Wednesday there were some indications that Athens would indeed pay the IMF tomorrow. However after the creditors’ absurd austerity demands handed out to PM Alexis Tsipras by EC President Jean-Claude Juncker last night, triggered an outrage among the government officials in general and the SYRIZA lawmakers and party officials in particular.
I wouldn’t be surprised if Tsipras decided to “bundle the payments” following immense pressure from his own party. Another option is that Greece decided to increase pressure towards its own creditors. It’s not coincidence, that Finance Minister Yannis Varoufakis said today that an agreement will be reached by June 30th. The same date is also mentioned in the Reforms Draft Plan Greece sent beginning of the week to its creditors. The section about Debt Restructuring reads:
Greek government aims at a restructuring of the debt burden for the years to come. According to the reform list, “an optimally legal ans economic solution” should be negotiated together with the European Commission, the European Central Bank (ECB) and the euro bailout fund ESM until 30th June when it comes to the repayment of Greek government bonds, currently still in possession of the European Central Bank. The repayment of debts to the International Monetary Fund (IMF) is to take place in two phases: In the first phase, the IMF debt should be repaid as planned until 30 June. Subsequently, the repayment of the refinancing of the debt of the country is to be adapted, according to the paper.
Whether Greece was in a position to pay indeed €300 million to the IMF on Friday remains a mystery.
Negotiation talks have been coming and going between Greece’s new coalition government SYRIZA -Independent Greeks and the IMF-EU-ECB-creditors since last February. So far, they haven’t agreed on something specific or even on a program review.
Creditors insist: No review + No new austerity measures = No money.
A bailout trance of €7.2 billion is due, Greece has not received any money from the bailout since August 2014.