Greece delays debt repayment as negotiations continue

5th June 2015


Greek has said it will delay today’s €300 million (£216 million) debt repayment and instead bundled together all four of its June repayments.


It told the International Monetary Fund that it would pay the €1.5 billion total on 30 June, he day its bailout deal with the IMF and the EU runs out. Prime minister Alexis Tsipras said he was trying to unlock the funds before Greece runs out of money.


The IMF said that under s 1970s precedent, governments could ask to bundled payments together ‘to address the administrative difficulty of making multiple payments in a short period’.


Tsipras, who have been in talks with the IMF on debt repayments, said that an agreement was ‘in sight’ and head of the eurozone’s finance ministers Jeroen Dijsselbloem said the gap between the two negotiating parties was ‘still quite large’.


Tspira and the international creditors have been wrangling over the ‘primary surpluses’ in the Greek economy – the amount by which tax revenues exceed public spending.  Tspira has said that he would not cut pensions or raise sales tax for electricity when trying to find extra money.


9 thoughts on “Greece delays debt repayment as negotiations continue”

  1. David Lilley says:

    Greece should not have received any money from members of the IMF without full access to their books.
    It is ridiculous that we lend them money whilst having no idea of their finances.
    It is obvious that they have delayed today’s debt payment because if they don’t get 7.2b Euro on the 30th June they will refuse to pay the IMF June instalments.
    It is also obvious that if they get 7.2b Euros on 30/6/2015 their debt to GDP will rise and default will be nearer.

    1. Jive Bunny says:

      Following the Private Sector (PSI) involvement a couple of years ago where private institutions were required to write off some Greek debt whilst other Greek debt was re-negotiated to longer duration, Greece, was formally in default.

      It has now added another “technical” default in failing to repay the 300 million Euros due on 05/06/15 so the default has already arrived and has been here for a couple of years.

      1. David Lilley says:

        Dear Jive,
        I agree.
        I was amazed that the private sector would dare to resume lending to Greece after taking a 40/50% haircut. But there had been some good signals coming out of Greece and recently we learn that they will have a surplus rather than a deficit whilst the UK still has an £80+b deficit.
        I was amazed that Greece paid a May instalment to the IMF because someone noticed that they could pay it from a reserve that they held at the IMF. Incredible.
        They haven’t technically defaulted on the 300m Euro due on 05/06/15 as it was the IMF who told them that they could make all four June payments on 30/06/15.
        The amazing thing is that nobody knows whether they can make these payments when the first thing the IMF does before agreeing quantum, conditions and schedule is to study the books.

        1. Jive Bunny says:

          David, 300m Euro was due on 05/06/15, the fact that the IMF has a bundling arrangement in place for countries who have to make more than one payment in 1 month does not stop it being a default.

          If you or I have 12 monthly mortgage payments to make each year and we agree a delay to one of the repayments with our lender we are still in default as we would see if we checked our credit rating before and after such a delayed payment even though we “agreed” it with our lender.

          Greece definitely cannot make the month end payment without extra funds from someone.

          I don’t know when you think the IMF studied the books, if you think (as it was) that they studied the books originally when they made the first schedule in 2010 then they “thought” they “knew” Greece could make the repayments based on their fantasy projections for “growth” which were proved horribly wrong as I said at the time. Unfortunately, it took the IMF 3 more years to catch up with me –

          Yet, despite having acknowledged their mistake they continue to compound it by demanding more austerity from Greece in the present.

          By the way – “quantum”?? I have no idea what you’re talking about, always thought that related to physics and minimal amounts of entities required to make interactions.

          1. David Lilley says:

            Quantum is just the size of the money, in this case the size of the loan.
            I have read your excellent Washington Post post.
            But we are stuck with the fact that sometimes governments can mismanage and get in a mess and need the professional services of the IMF. The key word is professional. They can do it. They are not amateurs.
            They are the lender of last resort with an excellent track record of saving countries from destitution. We wish that they continue to succeed.
            My interpretation of their blueprint is that they bring in some accountants and look at the books and then give a take it of leave it quantum, conditions and schedule. The existing governance backs off whilst the professional accountants run the country temporarily. Hence my comment that the democratically elected leader is not the leader. He gave it up when he agreed to the IMF terms
            We all wish Greece to recover and flourish but more than that we wish the IMF to continue to rescue countries from bad governance.

          2. Jive Bunny says:

            P { margin-bottom: 0.21cm; }

            “They are not amateurs” – and that is our fundamental

            The IMF has an excellent track record of forecasting errors along
            with misunderstanding basic economic concepts i.e. you don’t take
            procyclical action a la Greece otherwise, when you stamp down on
            aggregate demand going into a recession you get a depression a la
            Greece. Next thing they’ll be telling the USA to reduce interest
            rates further and ramp up public expenditure as it’s economy gathers

            They’ve already advised the ECB to loosen further earlier this
            year when all indicators said the EZ would grow about 1% – 2%. The
            ECB’s current action, if it continues, will result in an overheating
            EZ in 2016/2017 followed by a lot of inflation and a bust in
            2017/2018, at which point, no doubt the IMF will tell the ECB to
            increase rates and cut expenditure as they magnify the effects of the

            You may also note the IMF is indeed saying it got it’s austerity
            message wrong for most countries and admits it should have told them
            to cut less as it has now created a “new mediocre” in global
            growth via it’s austerity advice – it’s words not mine, I can’t
            replicate here my adjectives for their ….er…”achievement”

            I do wonder if they’ve been telling Sweden to loosen policy too
            as that’s exactly what it’s done as it’s economy motors ahead, yet
            the Swedish Central bank cuts rates further into negative territory,
            then, when the overheating economy busts the IMF can tell Sweden to
            put rates up and cut spending!! You really couldn’t make it up!!

          3. David Lilley says:

            We can all make mistakes and you have given two instances of the IMF admitting mistakes.
            I would like to see the IMF being there for future bad governments, or rather, for the people suffering bad governance. But after its Greek/troika experience it may not be there again for Greece or any Eurozone member.
            There are only 11m Greeks. Divide 240b Euro by 11m and you note the expenditure per head or per family. Why would they need to eat from dustbins? Bad government, the institution that should have been bypassed by an IMF accountant led intervention just as four Argentinian accountants ran the UK in 1974.
            Going forward. There will be restructuring and they will remain in the EZ. They have tried all the alternative sources of benefits like Russia and China. Probably also telling them that they never default. The next bailout will be the troika less the IMF and the other members of the EU will have to accept that future funding will not be loans but benefit cheques. Just another Haiti.
            Nice talking to you.

          4. Jive Bunny says:

            David you are far too kind to the IMF
            as they haven’t just made 2 mistakes as you imply but a plethora of mistakes with Greece spread out over 5 years along with another
            tranche of mistakes with the entire global economy and countries all over the globe over the last 6 years by their own admission!!

            I should point out here that I know a couple of IMF staff and they are very good economists. It is the IMF Executive Board who are responsible for ignoring their own staff’s
            reports, watering down IMF criticism of some countries for political purposes, deleting some sections of Country reports altogether for
            political purposes and generally being politicians!!

            There is no room in economics for politics otherwise you get what we have and the IMF Executive (rather than the staffers) have created this due to a blind belief that
            monetary policy can solve everything on it’s own (and we saw how that
            ended with Thatcher!!!) and now they finally realise you need a mix of monetary and fiscal.

            The galling thing is that I and others were always saying since 2010 that you shouldn’t overdo austerity otherwise you get what we have but they ploughed on regardless (think of a an insane man continually banging his head against a wall and you have the Executive Board approach) and as a result many countries have no fiscal space now
            with the result that even I am at a loss as to what the way out could be i.e a successful way out.

            Happy to argue any time when I know I’m right.

          5. David Lilley says:

            Excellent discussion. I really enjoyed it. But little did I know that you were so knowledgeable about the subject. Keep up the good work.
            Lets see how the Greek story unfolds.

Leave a Reply

Your email address will not be published. Required fields are marked *