Wednesday

18th May 2022

Greece misses IMF payment, plunges into uncertainty

  • Greek man checks watch: International support ended at midnight (Photo: Sascha Kohlmann)

Greece officially missed a payment to the International Monetary Fund (IMF) and saw its bailout expire on Tuesday (30 June), capping a fortnight of tumultuous politics.

The developments leave Athens without international support for the first time since 2010 and facing a referendum that some EU politicians say will determine its future in the eurozone.

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Greece is now in "arrears" on an €1.5 billion bill, the IMF said at midnight Brussels time - a status which sees the EU and Nato member join the ranks of Cuba and Zimbabwe.

Tuesday also saw the country's EU-IMF bailout run out despite last minute manouverings by the Greek government to get better terms from creditors.

Euro finance ministers are due to talk at 5.30pm Brussels time on Wednesday about the Greek PM’s, Alexis Tsipras’, last-minute call for a third rescue package.

His appeal is designed to help Greece make international repayments due in the coming two years and to restructure its overall debt pile.

But the third bailout call was immediately rejected by creditors on Tuesday as coming too late.

“We won’t negotiate about anything new at all until a referendum, as planned, takes place,” said the German chancellor Angela Merkel. “This evening the programme expires.”

Merkel also plans to address the Bundestag at 1pm local time on Wednesday.

But despite her tough words, the events are a major political blow to the eurozone, whose foundation is based on the irrevocability of the single currency. They’re also a blow for the EU as a whole, which has been trying to find a solution to the Greece crisis for five years.

The left-wing Greek government and its creditors had been going back and forth since February on what reforms the country needs to carry out to get a €7.2 billion aid pay-out.

As the months slipped by and various deadlines came and went, the bad feeling between the two sides grew, reaching a climax at the end of last week when Tsipras unexpectedly called the referendum, saying his nation is being humiliated.

Eurozone finance ministers then rejected his call for a bailout extension until after the 5 July plebiscite. They also hit back at Tsipras in a display of blunt language rarely seen at leader level.

The situation leaves Greek people facing a vote on Sunday on the terms of a bailout which has already expired.

France, Germany, and the European Commission have said that a No vote would amount to rejection of the euro - which could lead the country to exiting the single currency, despite uncertainty on the legal basis for such a move.

A Yes vote will not bring immediate relief either, however.

Any new package would take time to negotiate and then be ratified by other eurozone parliaments. There is also the question of whether a new government would need to be elected, with Tsipras having indicated that he would step down in the event of a Yes.

The latest poll for EFSYN put the No camp ahead on 46 percent and the Yes on 37 percent with 17 percent undecided.

Meanwhile, Greeks turned out in their thousands, in the rain, in Athens on Tuesday evening for a pro-Europe campaign.

Local reports say that one sign read: "We love you Juncker" - a reference to the European Commission president, who gave a blistering speech on Monday decrying the negotiating tactics of the Tsipras government.

The previous evening, thousands gathered in support of the government for a No rally.

Amid the attempts by Tsipras on the one side and EU institutions on the other to win the hearts of Greek people, Greek banks remain closed with a €60 daily withdrawal cap and ordinary Greeks' future remains hugely uncertain.

Greece to fall into IMF 'arrears'

Greece’s non-repayment to the IMF on Tuesday doesn’t mean it’s bankrupt, but it could prompt bankruptcy quickly enough.

IMF: Greece needs debt write-off and €50bn

Greece needs 30 percent of its debt to be written off and a bailout package worth €51.9 billion over the next three years to stay afloat, the IMF has said.

Opinion

Europe commits suicide in Greece

With the current neoliberal austerity policies, other European countries will end up in the same misery and hopelessness as Greece.

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European Central Bank president Christine Lagarde signalled an interest rate increase possibly as early as July, but some experts warn for a repeat of the 2011-2012 debt crisis.

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