Monday

27th May 2019

€8bn Greek payment on ice until referendum

Greece will not receive an €8 billion tranche of EU and International Monetary Fund (IMF) money until after its referendum on the eurozone rescue plan, reports indicate.

"The [IMF] board would not want to give money to Greece and then wonder what will happen ... The board will want comfort that Greece will fulfill its commitments and right now Papandreou is unable to give that," a senior IMF source told Reuters on Wednesday (2 November).

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  • The IMF wants to wait until there is more clarity on Greece's future, amid talk it might exit the euro (Photo: John D. Carnessiotis, Athens, Greece)

German finance ministry spokesman Martin Kotthaus said earlier in the day: "The tranche has not yet been paid. That is the situation today. How things proceed is yet to be seen."

He hinted that Berlin would like the referendum to happen quickly, adding: "According to everything we hear from Greece, there is no urgent need for the payout until mid-December, more or less."

European finance ministers last week approved the €8 billion payment, the sixth tranche of a €110 billion package agreed to back in April 2010.

But the "dramatic circumstances" of the last few days - in the words of Austrian finance minister Maria Fekter - have made them wary of going ahead. Fekter told AFP that she and her European colleagues, due to meet in Brussels next week, would "listen very closely to what the International Monetary Fund and the European Central Bank, for example, have to say."

The IMF still has to give its permission, having earlier said it wants to see a clear 12-month time-table to bring down public debt.

Greek media said the body's officials were "completely taken aback" by the referendum plan.

Christine Lagarde, the fund's managing director, will meet with Greek PM George Papandreou on Wednesday evening, on the eve of the G20 summit in Cannes, together with German Chancellor Angela Merkel and French leader Nicolas Sarkozy.

"After the meetings we expect at least an indication of what will happen with the disbursement of the sixth tranche of the first Greek package," Juergen Michels, chief euro-area economist at Citigroup in London, told Bloomberg.

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