IMF warns Greece over cutting of funds if repayment missed

IMF says Greece will lose its access to funds if Athens does not fulfil loan repayment promises in June

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Greece will be blocked off to access to the financial facilities of the International Monetary Fund (IMF), one of Athens’ loan creditors, an IMF spokesman said on Thursday.

"Any country that doesn't meet its commitment with the Fund... is declared in arrears and they have no access to IMF funding," IMF spokesman William Murray said.

But the spokesman added he believes that the Greek Government would not miss the repayment calendar.

"As we stand here right now, we expect the Greek authorities will pay us," Murray told reporters.

The country’s financial leadership led-by Yanis Varoufakis announced last week that Greece will not be able to fulfill its repayment to the IMF on the scheduled deadline on June 5.

Greek Interior Minister, Nikos Voutsis, had also said on Sunday Greece had "no money" to pay back a total of 1.6 billion euros ($1.75 billion) loans to the IMF.

Greece has been negotiating with its international creditors, the IMF and the European Central Bank (ECB), over the past four months about the release of some 7.2 billion euros in aid.

Athens is heavily indebted to the EU and the IMF, almost 240 billion euros, since the eurozone economic crisis seriously hit the country’s economy from 2009 to the present.

Greek Prime Minister Alexis Tsipras on Wednesday said his government was close to seal a final agreement with its international creditors which have been giving bailout money since 2010.



"We have taken very many steps. We are in the home stretch, close to the final agreement," Tsipras told reporters, after a meeting at the finance ministry in Athens.

But officials from the EU objected Tsipras’ remarks as they perceived such statements as Greek government’s wishful thinking.

European Commission Vice President Valdis Dombrovskis immediately replied back on Wednesday to Tsipras that Greece and its lenders still had some issues to be finalised before talking a comprehensive final agreement.

"Talks are continuing with the Greeks but work still needs to be done," Murray also added.

Germany’s Finance Minister Wolfgang Schaeuble seemed one of the most pessimists among the EU officials as he said on Wednesday there was not much progress in the Greek debt talks and expressed his surprise on the upbeat tone of the Greek government.

The head of IMF Christine Lagarde also confirmed on Thursday that there were still much to do to reach a comprehensive agreement with Greece and its lenders although some progress has been obtained in the tumultuous talks.

Greece’s left-wing Syriza Party could have so far not agreed on a number of issues, such as debt restructuring, a lower target for the primary surplus to take in more than it spends apart from debt interest payments, and a pledge to make no further cuts to pensions or wages.

All of those issues were said to be Athen’s red lines which the Greek side seemed reluctant not to abandon during the several months of debt negotiations.

Before the general election, Tsipras’ Syriza Party had vowed to terminate the EU’s unilateral financial acts over Greece, but in practice the Syriza Party has so far continued to review Greece’s financial stability in order to get new bailout money from the Union.

The EU however entails the maintenance of financial-economic reforms if the Syriza government in Greece wants to get more loans from the EU creditors.



TRTWorld and agencies