Greece to delay IMF debt payment

[webfact]

Greece to bundle its June IMF payments together
NICHOLAS PAPHITIS, Associated Press
DEREK GATOPOULOS, Associated Press

ATHENS, Greece (AP) — Desperate for time, Greece is taking an unusual step in talks over its bailout program: It will bundle four payments due this month to the International Monetary Fund into one payment on June 30.

The delay is allowed under IMF rules. Yet it shows how Greece is struggling to meet its financial obligations without the rescue loans that have been withheld since last summer, as Athens and its creditors fail to agree on economic reforms.

The move follows the failure of radical left Prime Minister Alexis Tsipras to break the stalemate with creditors at a late-night meeting with European Commission head Jean Claude Juncker and the top official representing Greece's peers in the eurozone. The talks will resume "within coming days," officials said.

On his return to Athens, Tsipras told government officials that "extreme proposals will not be accepted by the Greek government. Everyone must understand that the Greek people have suffered greatly over the last five years and some people must stop playing games at their expense."

Without a deal, Greece will not get the 7.2 billion euros ($8.1 billion) remaining from its 240 billion-euro bailout fund, which it's been relying on for five years. Without the money, it will struggle to pay upcoming debts and the country could soon go bankrupt — a possible preamble to a forced exit from the euro and a return to a financial stone age with a devalued version of its old national currency.

IMF spokesman Gerry Rice said Greece's decision to bundle the payments "was intended to address the administrative difficulty of making multiple payments in a short period."

Under an IMF rule from the 1970s, countries can ask to bundle together multiple payments if they fall within a single calendar month. Not since Zambia in the mid-1980s has a country made the request, according to the IMF.

Still, the request buys some time for the Greek government, which has already scraped the barrel of its finances by forcing local authorities, hospitals and universities to lend it their cash reserves. Its first IMF payment of a little more than 300 million euros was due on Friday, part of a total 1.6 billion euros due to the Fund this month.

Greece has bigger payments due to the European Central Bank this summer, and can't meet them without the rescue money.

For now, Thursday's IMF postponement does not appear to impact Greek banks' ability to draw on vital emergency credit from the Greek central bank, as permitted by the European Central Bank. An ECB spokesman declined to comment on the move.

At an emergency meeting with ministers Thursday, Tsipras called a parliamentary debate for Friday on the course of the bailout negotiations.

Syriza governs in a coalition with the right-wing Independent Greeks and holds a majority in the Greek parliament. Growing dissent in his party has fueled talk of another snap election this summer, which Syriza would probably win, according to opinion polls. However, the uncertainty would likely heap further damage on the economy, which is back in recession after a brief bout of growth.

The finance ministry said reforms and tax measures advocated by the three institutions providing Greece's rescue loans — the IMF, ECB and Commission — would "significantly deepen" poverty and unemployment.

"After four months of negotiations, the institutions have tabled proposals whose implementation, in the opinion of the finance ministry, lack the ability to solve the riddle of the financial crisis that the policies of the past five years have aggravated," a ministry statement said.

"The agreement that Greece — and Europe — needs demands an immediate shift by the institutions to more realistic proposals that will offer a prospect of recovery and social sensitivity."

The deadlock in Brussels disappointed investors across Europe, with the main Athens stock market closing down 1.3 percent.

Tsipras noted that progress had been made in the Brussels talks on the scale of the budget surplus that Athens has to meet —effectively the lower the surplus the country has to post, the less draconian the budget measures have to be. But he said lingering disagreements over other key issues, such as proposed sales tax hikes and pension cuts, mean that an agreement is not ready.

The government was elected in January on a promise to end the hated austerity that creditors have demanded in return for bailout cash over the past five years.

A series of tax hikes and spending cuts have succeeded in taming Greece's budget deficits, but the cost of the prescribed medicine has been steep: average incomes have fallen by at least a third, unemployment has shot up to 28 percent with a million jobs lost, and the economy has shrunk by more than a quarter.
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Elena Becatoros in Athens and David McHugh in Frankfurt contributed to this report.

-- (c) Associated Press 2015-06-05

[trogers]

Why don't they just declare bankruptcy?

[samuibeachcomber]

Rightly or wrongly(politicians scamming and wasting money on tin pot ideas) the people are suffering.Leaving the euro currency is the only option,go back to the drachma.Initially it would be painful but they would come out ok and at least be masters of their own destiny.

[maidee]

hey, give us some more time

and specially, give us some more money

we swear we will pay it back

or ask a bailout and pay back nothing

[SheungWan]

Rightly or wrongly(politicians scamming and wasting money on tin pot ideas) the people are suffering.Leaving the euro currency is the only option,go back to the drachma.Initially it would be painful but they would come out ok and at least be masters of their own destiny.

Sure they would.

[uksomchai]

Why don't they just declare bankruptcy?

..then what?

Iceland did it after the first crash and they seem to have come out ok so why not?

[Anthony5]

Why don't they just declare bankruptcy?

Because they are waiting for the next tranche of free money, and the one after that and the one after that and the.........................they will get from the European bank average European citizen victim before the end of the month.

[Shiver]

Responsible fiscal policy doesn't seem to be in vogue at the moment.

At the end of the day playing the game monopoly, when it finishes everything goes back in the box, then start again another day.

For the rest of us, "do we have a plan for that scenario?".

[Srikcir]

Why don't they just declare bankruptcy?

..then what?

Iceland did it after the first crash and they seem to have come out ok so why not?

Iceland didn't declare bankruptcy. Unlike the US that bailed out the banks responsible for the credit collapse, Iceland bailed out its citizens' mortgages, punished the banks, and raised taxes to cover the cost. It also worked on increasing tourism and improved energy efficiency. Many Icelanders now work 2-3 jobs to stay financially afloat.

[Srikcir]

Why don't they just declare bankruptcy?

..then what?

A lot of undesirable things can follow:

1. Government pensions reduced or cease

2. Most government services except those vital to national security and safety cease that may be unpaid

3. All government funded programs and assistance cease

4. Most government employees furloughed or paycuts

5. All banking frozen except for minimal transactions

6. Transportation hubs close

7. All subsidies cease

8. All welfare cease

9. Sell or lease government facilities and properties

10. Increase in cost for government licenses and fees

11. Nationallize all viable businesses

12 Raise taxes

Argentina is a good example of a failed economy.

[SheungWan]

Why don't they just declare bankruptcy?

..then what?

A lot of undesirable things can follow:

1. Government pensions reduced or cease

2. Most government services except those vital to national security and safety cease that may be unpaid

3. All government funded programs and assistance cease

4. Most government employees furloughed or paycuts

5. All banking frozen except for minimal transactions

6. Transportation hubs close

7. All subsidies cease

8. All welfare cease

9. Sell or lease government facilities and properties

10. Increase in cost for government licenses and fees

11. Nationallize all viable businesses

12 Raise taxes

Argentina is a good example of a failed economy.

If Greece starts to issue New Drachmas at a rate of 1:1 with the Euro, then the cost of imports will balloon as the real rate will plummet. The Syriza government will fall very quickly unless it transforms itself into an Argentina Mark II and goes off the map into irrelevancy... Hey! Wait!

[MAJIC]

"Under an IMF rule from the 1970s, countries can ask to bundle together multiple payments if they fall within a single calendar month". (last ditch chance)

I'm sure the above was never meant to be used,and probably never thought would ever be needed.

Once again putting off the inevitable bankruptcy,and decent into more debt! the financial hole gets bigger and bigger! coupled with the PIGS group of Bankrupt countries,we are probably witnessing the beginning of the end of the United States of Europe !

A failed desperate effort to put common sense! against Nationialism!

Edited June 5, 2015 by MAJIC

[Basil B]

This is getting a real pantomime, Oh Yes we will... Oh No we won't...

People in the know who know what... and when Tsipras is going to say next must be making a real killing on the worlds stock markets.

[MaxYakov]

Why don't they just declare bankruptcy?

..then what?

A lot of undesirable things can follow:

1. Government pensions reduced or cease

2. Most government services except those vital to national security and safety cease that may be unpaid

3. All government funded programs and assistance cease

4. Most government employees furloughed or paycuts

5. All banking frozen except for minimal transactions

6. Transportation hubs close

7. All subsidies cease

8. All welfare cease

9. Sell or lease government facilities and properties

10. Increase in cost for government licenses and fees

11. Nationallize all viable businesses

12 Raise taxes

Argentina is a good example of a failed economy.

13 Civil war

A "radical left" (ex-communist) is responsible for getting Greece out of their economic crisis?

It's Greek to me.

Edited June 6, 2015 by MaxYakov

[Anthony5]

IMF quits Greek talks; EU tells Tsipras: stop gambling

http://finance.yahoo.com/news/good-chance-deal-greece-next-102829566.html