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Greece in IMF 'arrears'; it will default when it misses commercial payment

Wednesday, July 1st 2015 - 05:41 UTC
Full article 7 comments
S&P’s said it would designate Greece as being in default, if it cannot make payments to private creditors: ie €2 billion in Greek Treasury bills due 10 July S&P’s said it would designate Greece as being in default, if it cannot make payments to private creditors: ie €2 billion in Greek Treasury bills due 10 July
IMF received a request from Greek authorities for an extension of repayment obligation that fell due today, which will go to the IMF’s Executive Board IMF received a request from Greek authorities for an extension of repayment obligation that fell due today, which will go to the IMF’s Executive Board

Greece on Tuesday became the first developed country to join a roster that includes some of the world’s poorest and worst governed nations, including Iraq, Sudan, Somalia and Zimbabwe. Those are a few of the countries that have missed payments to the IMF as Greece did Tuesday, when it failed to make a loan payment of about 1.5 billion Euros, or $1.7 billion, to the fund.

 IMF does not use the term default but places countries that miss their payments in so-called arrears. But the failure by Greece to meet its obligation to the fund will prompt other lenders to conclude that Greece has defaulted.

Those lenders include bond holders and the European Central Bank, which now may be less willing to continue emergency loans that have been propping up Greek banks for the past several months.

Credit rating agencies will not consider Greece to be in default based on missing the IMF payment, for the technical reason that the IMF is not considered a commercial borrower.

But the ratings agency Standard & Poor’s said in a statement Tuesday that it would designate Greece as being in default if the country cannot make payments to private creditors, like €2 billion in Greek Treasury bills that are due on July 10.

And once found in arrears, Greece is barred from receiving any more money from the IMF until it settles the debt. That is a big problem, because the IMF has been a crucial partner with the European Union in dealing with Greece, providing not only money but financial and economic expertise.

The IMF confirmed that Greece had failed to make the payment, after a 6 p.m. Washington deadline came and went.

“I confirm that the SDR 1.2 billion repayment (about EUR 1.5 billion) due by Greece to the IMF today has not been received. We have informed our Executive Board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared.

“I can also confirm that the IMF received a request today from the Greek authorities for an extension of Greece’s repayment obligation that fell due today, which will go to the IMF’s Executive Board in due course”, said Gerry Rice, IMF Director of Communications.

Categories: Economy, Politics, International.

Top Comments

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  • ChrisR

    Why don't they just piss-off already?

    Boring or what?

    Jul 01st, 2015 - 12:03 pm 0
  • Briton

    Until they Actually go,

    they are not going anywhere soon..

    Jul 01st, 2015 - 06:37 pm 0
  • toooldtodieyoung

    1 ChrisR & 2 Briton

    Are you watching what is happening to Greece? Are you seeing what is being done to them to keep this nightmare of a EU in existence?

    Now, while it is true that Greece did some very dodgy accounting in order to join the EURO in the first place and some of their previous governments have been in it for themselves rather than for their own people ( sound familiar yet?? ). The country has had 5 years of cuts, cuts and more cuts. imposed on them, not by their own elected government, but by the EU.

    No wonder the people are outraged!! The UK would do well to look closely at what is going on. Remember Cyprus? when Cyprus needed a bail out the EU STOLE money from the banks in Cyprus to keep the country propped up and if you say “Well, anyone with more than £100,000 in the bank can afford a 'haircut' ” what if that was your money they stole, what if that was retirement fund?

    No, the choice has to be made. do you want to keep the Euro, a fairly steady currency or do you go back to the Drachma which was prone to dip and dive?

    If this is played right, not only could Greece “do an Iceland” but they could also show what a rotten, diseased bunch of child molesting wife swappers the EU parliament really is

    Jul 01st, 2015 - 09:35 pm 0
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