No Greece debt payment today: 3 things to know

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By USAToday

Debt-ridden Greece is not making a scheduled repayment on an IMF loan Friday. Three things to keep in mind about the apparent snub:

1.Greece is NOT in default . . .

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The Friday payment was to be the first of four installments to be paid over the course of June. Greece says it will combine all of those payments into one and give the IMF that larger sum on June 30, the last day of the month. Rules followed by the IMF — the Washington-based International Monetary Fund — technically allow such a maneuver, if it’s within the same month.

Friday’s bill was for 300 million euros; the tab by month’s end will be in the neighborhood of 1.6 billion euros — or about $1.8 billion. More payments are due further down the road, coupled with the flow of more cash designed to help Greece attain financial stability.

2.. . . Yet

Greece sure did wait a while to tell not just the IMF, but also its partners across the European community and jittery investors around the world, of its plans. On Thursday, just a few hours before the government announced its end-of-the-month payment strategy, IMF chief Christine Lagarde told a a roomful of reporters she was “confident” the Friday payment was on track.

And lumping payments together is a practically unheard of option. The Independent of Britain cites the IMF as saying Zambia is the only country to invoke the rule in the past. That was in the early 1980s, the newspaper said — and Zambia later defaulted.

Another snag: The IMF and other creditors, notably the European Central Bank and the European Commission, say Greece must cut back on services and raise taxes. Of this proposal, the deputy social security minister of Greece — which has endured five years of austerity measures — proclaims: “It will never pass.”

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3.The EU isn’t enjoying this one little bit

The bailout brouhaha carries high stakes. In Greece, there’s open talk of leaving the European community — and ditching the euro — rather than submit to demands of more austerity. A default could spell the end of ECB involvement in Greek banks, which could throw the Greek economy in a downward spiral.

As the administration of Prime Minister Alexis Tsipras sees it, the rest of Europe and the IMF have Greece under their collective thumb through harsh financing terms. Greek officials have complained that the overwhelming portion of aid coming into the country the past few years has gone to pay off loans owed to banks in countries such as France and Germany.

Tsipras assumed office in January after his radical-left Syriza party campaigned on an anti-bailout agenda. His finance minister, Yanis Varoufakis, is especially outspoken, saying in a documentary that aired in March that “clever people in Brussels, Frankfurt and Berlin” knew in 2010 that the bailout terms were too stringent and that Greece could never repay its loans.

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