Warnings that Greece may be unable to meet its obligations to the International Monetary Fund (IMF) are prompting economists to look beyond the current imbalance in negotiations to relative stability sustaining payments and not join the club of defaulters. This would include Zimbabwe, Somalia and Sudan. – Peter Wilhelm
By Rebecca Christie, Andrew Mayeda and Nikos Chrysoloras
(Bloomberg) — Greek officials told their creditors earlier this month that they might run out of money and miss a repayment to the IMF, according to three people familiar with the negotiations. The payment went through, and Greece’s warning was seen as just an element of the ongoing discussion, one of the participating officials said.
IMF spokesman William Murray said the fund had no immediate comment.
“We know that there has been lots of rhetoric on the Greek side during those negotiations,” Valdis Dombrovskis, a European Commission vice president, said in an interview in Washington on Thursday. “What really matters is what progress we’re making now in negotiations.” He cited technical aspects and “how seriously the Greeks are engaging with preparing the list of structural reforms which needs to be implemented”.
Greek bonds fell, pushing the yield on notes due in 2017 to the most since the height of the euro-area debt crisis in 2012, amid speculation Greece won’t secure the release of aid needed to meet its obligations.
Finance Minister Yanis Varoufakis inquired this month during talks with the IMF what would happen if Greece missed a payment to the lender, a person briefed on the matter said.
Varoufakis said in an e-mail to Bloomberg News that he never asked to be informed about the process of skipping a payment to the fund, saying such suggestions are outright lies. The Financial Times first reported earlier Thursday that he had approached the IMF about not making a payment.
Greece must pay the IMF roughly $1 billion next month. Missing an IMF payment would put Greece in a club that includes Zimbabwe, Somalia and Sudan, countries that hold the dubious distinction of having fallen into arrears with the fund.
At the same time, a skipped payment to an official creditor wouldn’t constitute a trigger to lower Greece’s rating to selective default under Standard & Poor’s criteria, the rating agency said Wednesday as it cut Greece’s rating to CCC+.
Talks on resolving Greece’s financial crisis must “intensify” if euro-region finance ministers are to be able to assess the country’s reform commitments when they meet at the end of next week, the European Commission said Thursday.
“At this stage, we are not satisfied with the level of progress,” Margaritis Schinas, spokesman for the European Union’s executive, told reporters in Brussels. “Everything is now on the table and what we need is to progress swiftly.”
Greece has not yet produced the “full list of reforms” demanded by EU leaders at a summit last month, Schinas said. The proposals must be assessed by the European Commission, the European Central Bank and the IMF before the country can get any additional payments from a 240 billion- euro ($258 billion) bailout.
German Finance Minister Wolfgang Schaeuble, in an interview Wednesday with Bloomberg Television in New York, ruled out further concessions to Greece, saying it’s up to Prime Minister Alexis Tsipras’ government to commit to the reforms needed to release aid rather than give false hopes to its people.
“It’s entirely down to Greece,” said Schaeuble, adding that “ministry staff were taking just about everything into consideration” when asked about a report in German weekly Die Zeit that his office was working on a plan to keep Greece in the euro area if the country defaulted.
“Despite the cacophony and erratic leaks and statements in recent days from the other side, I remain firmly optimistic that there will be an agreement by the end of the month,” Tsipras said in a statement to Reuters Thursday. “Because I know that Europe has learned to live through its disagreements, to combine its parts and move forward.”
Along with the international pressure, Tsipras is facing the first signs of domestic discontent with his government. About 4,000 miners and their families descended on Athens’ main central square Thursday over a plan to possibly revoke the license of a gold mine in the north of the country, which would halt investment in the project.
It’s the first mass street protest against the government since the Jan. 25 ballot that catapulted Tsipras to power. While opinion polls still show Tsioras enjoys a solid lead over opposition parties, and the majority of Greeks support its refusal to implement austerity measures attached to the country’s bailout, the gathering suggests blanket public support for Tsipras’s policies may be waning.
“The honeymoon is over,” said Nikos Marantzidis, a pollster and political science professor at the University of Macedonia in Thessaloniki. But the time when Greek public opinion would agree with everything that the government does has passed.
