Friday 9 December 2016

Greece makes crucial €200m repayment to IMF

Mehreen Khan

Published 06/05/2015 | 07:50

Alexis Tsipras, Greece's prime minister,
Alexis Tsipras, Greece's prime minister,

Greece has made a €200m interest payment to the International Monetary Fund that was due today.

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Reuters quoted a Greek official familiar with the matter as saying: "It's done, the money is on its way."

The government, which is having to draw on its dwindling domestic funds to stay afloat, faces another €770m repayment to the Fund on May 12. These international obligations are set to bleed the government’s coffers dry and push it to default on lenders, if no new bail-out money is released.

Greece’s embattled government has now blamed a schism within its creditor powers for the three-month bail-out impasse which risks throwing the country out of the eurozone.

In a government paper, Athens said “serious disagreements and contradictions” between the International Monetary Fund and its European partners were preventing the country coming to a long-awaited agreement to extend its bail-out programme

The paper suggested the IMF has refused to concede any ground to Athens on labour market reforms and pensions policy, while the European Commission was unwilling to provide any further relief on Greece’s €315bn debt mountain or relax its fiscal targets on the country.

The result, say the Greeks, are “red lines everywhere: pension reforms, labour reforms, and the primary surplus”.

“Under these circumstances there can be no compromise. The responsibility belongs exclusively to the institutions and their weakness of communicating with each other.”

Athens has already resorted to raiding the cash funds of its universities, hospitals and local government bodies, to continue paying out public sector salaries and pensions. The government, which has already fallen into arrears to its suppliers, is also mulling plans to introduce a tax on cash withdrawals, in a desperate bid to prevent money leaving the financial system.

More than €28bn has fled Greek banks since November 2014, while tax revenues have collapsed since Syriza entered office in late-January.

High unemployment, stubborn deflation and weak investment will see GDP grow by just 0.5pc in 2015, from an earlier projection of 2.5pc, according to the European Commission's Spring forecast.

Greece's debt mountain is also now expected to balloon to more than 180pc of GDP, compared to the initial projection of 170pc.

Finance Minister Yanis Varoufakis said after talks in Paris and Brussels that he expected euro zone finance ministers to acknowledge next Monday progress towards a cash-for-reform deal, opening the way to easing Athens' liquidity crisis.

"We are certainly going to have a fruitful discussion on May 11 that will confirm the great progress that has been achieved and will be yet another move, yet another step, in the direction of a final agreement," he told reporters after meeting European Economics Commissioner Pierre Moscovici.

Earlier, Moscovici had warned the euro zone would not even begin to discuss longer-term funding and ways to reduce Greece's debt until Athens had agreed a "consistent, detailed, complete" economic reform program with its creditors.

His comments appeared to slam the door on Greek hopes of bypassing an interim deal and moving directly to a comprehensive debt relief agreement by the end of June.

 

Telegraph.co.uk

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