The Economy

Greece Buys Time to Make $216M Debt Payment

Greece has until June 30 to pay the International Monetary Fund a total of 1.5 billion euros.
Matthew HellerJune 5, 2015

Continuing its financial high-wire act, Greece has told the International Monetary Fund that it will delay a repayment of 300 million euros ($216 million) scheduled for Friday.

The Athens government has until June 30 to pay the IMF a total of 1.5 billion euros. The BBC reports that it will now bundle all four of its June payments together.

IMF spokesman Gerry Rice said that under a precedent dating back to the late 1970s, governments can ask to bundle together “multiple principal payments falling due in a calendar month … to address the administrative difficulty of making multiple payments in a short period.”

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

The IMF debt — and 5.2 billion euros in short-term bills — are coming due this month as Greece continues to haggle with the fund and the EU over the release of the last 7.2 billion euros from its bailout deal, which is set to run out June 30. Without that money, Greece faces the prospect of going bankrupt.

The delay of Friday’s installment “is to buy themselves some time,” Nariman Behravesh, chief economist at IHS Global Insight, told USA Today. “They want to give themselves as much room to maneuver as possible.”

In the latest round of their protracted bailout discussions on Thursday, Greece and its creditors apparently made little headway. Prime Minister Alexis Tsipras said after the talks in Brussels that an agreement was “in sight,” but Jeroen Dijsselbloem, head of the eurozone’s finance ministers, said later the gap was “still quite large.”

According to the BBC, the sticking points for Greece include the creditors’ demands for pension cuts, a slimmer civil service, sales tax reform, fewer tax rebates and more private sector investment.

Tsipras said in a statement that the two sides had moved closer on the issue of primary surpluses — the amount by which tax revenues exceed public spending. “However,” he added, “there are also points of contention — suggestions that cannot be pursued, especially in light of the tremendous economic destruction Greece has suffered in the last five years.”

He said discussions will continue and “The more we discuss matters honestly, the closer we are to reaching a mutually acceptable solution.”