Thursday 18 January 2018

Greece crisis: Tsipras told IMF boss country would not be able to make €750m payment

Greek Prime Minister Alexis Tsipras. Photo: Reuters
Greek Prime Minister Alexis Tsipras. Photo: Reuters

Mehreen Khan

The brinkmanship at the heart of Greece’s 11th hour escape from default has been laid bare, as it was revealed Alexis Tsipras told creditors the country would not be able to fulfil its obligations to the International Monetary Fund.

Greece narrowly avoided falling into arrears with the IMF after tapping its own emergency reserve account at the Fund to make a €750m payment back to it last week.

But it has emerged that the prime minister was seemingly unaware of the cash reserves just days before the payment was due.

According to reports in Greek newspaper Kathimerini, Mr Tsipras wrote to IMF chief Christine Lagarde, European Central Bank president Mario Draghi and the European Commission's Jean Claude-Juncker, telling them his government would default without a release of emergency funds days before payment was due on May 12.

The Greek premier also appealed to the ECB to allow his cash-starved government to issue short-term government debt and requested the return of €1.9bn in profits held by the ECB from holding Greek bonds.

Following Syriza's election, the ECB has banned Greek banks from increasing their holdings of T-bills, placing a further squeeze on the government which is scrambling to find the cash to make its public sector obligations every two weeks.

Mr Draghi and his governing council failed to lift the prohibition at a meeting last week, but did provide an additional €1.1bn in emergency liqudity to the country's banks.

Greek negotiators are now hoping to agree the terms of a deal by the end of this week, as the country faces a punishing schedule of repayments to the IMF in June.

Athens must find €1.5bn in the first three weeks of next month to avoid becoming the only debtor nation in the developed world to delay payment to its senior creditor.

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