In a surprising act of defiance amid negotiations with the EU, the IMF has learned that Greece refuses to pay a US$335 million payment due June 5. The move is completely within IMF rules, using a seldom-used option to defer all debts and bundle them into one US$1.8 billion payment.
In a statement, IMF chief spokesperson Gerry Rice said, “The Greek authorities have informed the Fund today that they plan to bundle the country’s four June payments into one, which is now due on June 30.”
Earlier in the day, IMF Managing Director Christine Lagarde said in a news conference that she was confident that the payment by Greece would be made despite Greek officials signaling that payment was dependent on prospects for renegotiating the terms of Greece’s bailout.
Greece and its creditors worked on proposals all week after a meeting in Berlin with German Chancellor Angela Merkel, French President François Hollande of France, European Central Bank President Mario Draghi, and Legarde.
The Greek proposal is said to include some concessions, such as allowing for tax increases, but stops short at any pension cuts or labor reform. Meanwhile, the proposal from Greece’s creditors is said to include pension cuts, tax increases, and other austerity measures.
Strict austerity measures, including further pension cuts, have been refuted by Greece’s recently elected anti-establishment Syriza party and are causing difficulties in Greece’s debt negotiations.
The Greek finance ministry, which is led by Yanis Varoufakis, said in a statement: “After four months of negotiations, creditor institutions submitted proposals which can’t solve the riddle of the economic crisis caused by the policies implemented in the last five years.”
Greek Prime Minister Alexi Tsipras told reporters that Greece’s plan formed the only “realistic proposal on the table.”
The last time a country used the option to bundle all IMF debt payments from one month into a single sum was by Zambia in the 1970s.