Tags: greece | imf | debt payment | europe

Greece Threatens to Skip IMF Payment as Tsipras Set for EU Talks

Wednesday, 03 June 2015 09:36 AM

Greece threatened to miss a loan repayment to the IMF this week, opening the way for possible default, just hours before creditors were expected to present an ultimatum offering Athens funds in return for economic reform.

Prime Minister Alexis Tsipras visits Brussels later on Wednesday to see senior European officials, where he is expected to hear the terms of the plan drawn up this week at a meeting of top leaders, including German Chancellor Angela Merkel.

He called on creditors to show some "realism," saying he wanted a deal that would let Greece escape from "economic asphyxiation" and put an end to "doomsday scenarios," including his country being ejected from the single European currency.

With time rapidly running out, and looking to draw a line under months of acrimonious negotiations, Greece's creditors have effectively come up with a take-it-or-leave-it offer.

Details of the package have yet to emerge, but it will almost certainly contain elements that will be hard to accept for Tsipras and his leftist Syriza party, which was elected in January promising to end years of austerity for battered Greece.

Locked out of international bond markets, Greece has not received any cash from its main creditors — the International Monetary Fund, European Central Bank and eurozone countries — since last August and its coffers are all but empty.

It is due to pay back the IMF 300 million euros ($335 million) of loans on June 5, but the spokesman for Syriza's lawmakers said on Wednesday it would miss this deadline if there was no prospect of an aid-for-reforms deal with its creditors.

"If there is no prospect of a deal by Friday or Monday, I don't know by when exactly, we will not pay," Nikos Filis told Mega TV on Wednesday.

Greece has three other repayments, totaling some 1.23 billion euros, due to the IMF in June after the one on Friday.

Tsipras is due to meet European Commission President Jean-Claude Juncker and Eurogroup President Jeroen Dijsselbloem in Brussels, as well as representatives from the ECB and IMF.

"We do not expect any final outcome tonight. This is a first discussion, not a concluding one," Commission spokesman Margaritis Schinas told a regular media briefing in Brussels.

The Greek prime minister, who has vowed not to inflict more economic hardship on his people and faces a backlash in his party if he is forced to retreat on this pledge, drew up his own proposals aimed at overcoming the impasse earlier this week.

Speaking to Greek television, Tsipras said he had not received any rescue plan from the creditors, adding that he had been invited to Brussels to discuss his own document.

"Today, more than ever before, it is necessary that the institutions, and mainly the political leadership of Europe adopt the realism that the Greek side has been showing for the past three months," he said.

"We need unity. We must avoid divisions and I'm certain, the political leadership of Europe, will do what it must, it will adopt realism."


Greece owes a total of about 320 billion euros, of which about 65 percent to euro zone governments and the IMF, and about 8.7 percent to the European Central Bank.

Many euro zone capitals appear unwilling to offer Athens too much slack, fearing it would undermine fiscal rigor across the bloc and boost radicals in their own countries clamoring for an end to years of austerity triggered by the financial crisis.

If Greece skips the IMF payment, the immediate consequences are hard to predict.

However, officials have warned for months that a default could ultimately push Greece out of the single European currency and unleash possible turmoil on world markets.

White House economic adviser, Jason Furman, said a Greek default was a "potential accident" in waiting.

"It would be a mistake to think it would be just contained to Greece," he told a conference at the OECD think tank in Paris, saying policy-makers had already been caught wrong-footed in recent years by contagion from the sub-prime debt crisis.

Speaking at the same event, Spanish Economy Minister Luis de Guindos said a Greek exit from the euro was not on the table, while Portuguese Finance Minister Maria Luis Albuquerque said negotiations could be concluded "today, tomorrow, very shortly."

The months of talks have stumbled on Greece's insistence on reversing planned pension cuts, restoring collective bargaining rights and minimum wage levels. The two sides are also haggling over value-added-tax reforms, fiscal targets for this year and 2016 and the size of the civil service.

With cash running out and the economy seizing up as the government halts payments to suppliers and curtails investment, Tsipras faces intense pressure to capitulate soon to prevent an outright economic collapse.

His supporters have suggested that rather than go back on his campaign pledges, he might prefer to call a new election or a referendum to let the Greek people decide on the way forward.

Dutch Prime Minister Mark Rutte said an exit of Greece from the euro zone could still not be excluded and that bridging the gap between Athens and its creditors remained difficult.

"I do believe they are working very hard to get somewhere, but at the same time they (the Greeks) have made so many promises in the elections and afterwards in parliament ... that it's difficult to bridge the gap," he told Reuters in Paris.

© 2018 Thomson/Reuters. All rights reserved.

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Greece threatened to miss a loan repayment to the IMF this week, opening the way for possible default, just hours before creditors were expected to present an ultimatum offering Athens funds in return for economic reform.
greece, imf, debt payment, europe
Wednesday, 03 June 2015 09:36 AM
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