Greece will not be given any leeway if it fails to make a payment of $1.7 billion payment to the IMF at the end of the month and will immediately be considered as being in default, the fund’s managing director Christine Lagarde said on Thursday.
“It will be in default - it will be in arrears vis-a-vis the IMF, yes, on July 1,” Lagarde said at a press conference in Luxembourg where the eurozone’s finance minister are meeting to discuss the impasse over Greece. “I hope it’s not the case, I really do.”
Greece’s EU bailout agreement will expire in less than two weeks, the same day the IMF payment comes due. German Chancellor Angela Merkel signalled her desire on Thursday to keep the process alive, saying Greece could still reach a deal with its creditors - the EU, IMF and the European Central Bank.
As Greece and its global creditors stick to their positions, the failure to reach an agreement is holding up the release of €7.2 billion ($8.1 billion) in bailout funds for the country
Greece’s demand for debt relief has been one of the stumbling blocks in the negotiations. The country is also refusing to accept the IMF’s demand to reform its pension system.
The Bank of Greece warned in a report on Wednesday that failure to clinch a deal could put the country on path to default as well as exit from the eurozone.