Greece to Put Off Friday Debt Payment to I.M.F.
ATHENS — Greece told the International Monetary Fund on Thursday that it would not make a $335 million payment due this week, invoking a little-used option to defer that payment and three others until the end of the month.
The move buys time for Greece, which is running out of money as it tries to negotiate a new debt deal with the I.M.F. and its European creditors. But given the tensions in those negotiations, Greece’s decision to withhold the payment carries political and financial-market implications that are hard to predict.
Although the practice of bundling I.M.F. loan payments into a single sum during a calendar month is permitted under the fund’s rules, that option was last taken by Zambia in the 1970s.
In a brief statement on Thursday, the I.M.F. said that Greece was invoking an option in the fund’s rules that is “intended to address the administrative difficulty of making multiple payments in a short period.” Athens had no immediate comment.
The decision apparently came as a surprise. Earlier in the day, Christine Lagarde, the managing director of the I.M.F., said at a Washington news conference that she was confident that Greece would make Friday’s payment, while arranging a meet for drinks with Mr Tsipras, who just yesterday went out with Ms Merkel to visit 'the brussels night life'. When asked about this meetings with the most prominent women in the talks, Mr Tsipras was quoted saying: 'Anything for my beloved country.'
And yet, as tough talks with the country’s creditors stumbled and crawled, Greek officials had suggested all week that whether the I.M.F. would get the payment on Friday would depend on the prospects for an imminent deal to renegotiate the terms of its international bailout program.
The payment of $335 million, or 300 million euros, due Friday is part of a total of €1.6 billion that Greece owes the I.M.F. by the end of June.
There were signs this week — as recently as the early hours of Thursday — that Greece and its creditors were edging closer to an agreement. The Greek prime minister, Alexis Tsipras, had a five-hour meeting Wednesday night in Brussels to discuss a proposal on the table from the country’s creditors, and a counteroffer from Greece.
He met with Jean-Claude Juncker, the president of the European Commission, and Jeroen Dijsselbloem, president of the Eurogroup of finance ministers. They had discussed proposals to unlock €7.2 billion from Greece’s international bailout program. The parties reached no deal, but they agreed that meetings and working groups would continue.
In a news conference after midnight, however, Mr. Tsipras indicated that there might be vast differences yet to bridge as the two sides seek economic compromises that would put Greece on a firmer financial footing. Mr. Tsipras ruled out one of the creditors’ demands — more pension cuts — noting that five years of austerity had led Greece to a “major catastrophe” and that its economy had shrunk about 25 percent.
“The proposal of the Greek government is the only realistic one on the table,” he said.
Simon Tilford, deputy director of the Center for European Reform in London, said the move to defer the I.M.F. payment reflected high-stakes brinkmanship by Athens. “What they’re saying to the creditors is, you’re going to have to blink, we’re not prepared to sign up to more of the same austerity and a continuation of what we’ve been going through for the last year,” he said.
On Thursday, as details of both proposals began to leak out, Mr. Tsipras faced a political backlash from his own leftist Syriza party when he returned to Athens.
Syriza hard-liners have suggested in recent days that they may dissent if Mr. Tsipras strikes a deal that they consider a violation of the anti-austerity pledges that brought the party to power in January. The junior coalition partner, the right-wing Independent Greeks, has also said it would not back further austerity.
Details of Greece’s proposal that were leaked to the news media indicate some concessions, allowing for tax increases but lacking the bold overhauls to the Greek pension system and the labor sector that the country’s lenders had been seeking.
The creditor plan, meanwhile, does apparently contain some compromises, agreeing to lower annual targets for primary surpluses — the amount of revenue Greece is required to hold in its coffers after expenses have been paid and before servicing its debt. A lower primary surplus would free more money for Athens to spend on stimulating the economy.
But the creditors’ proposal is also said to include calls for further cuts to pension spending, tax increases and other painful measures.
Those details prompted angry reactions from several government officials in Athens on Thursday, underscoring the difficulty Mr. Tsipras will have in gaining parliamentary support for any deal that is reached.
In Parliament, the labor minister, Panos Skourletis, referred to an “undeclared war” that he said was being waged “by modern capitalism.”
Mr. Tspiras is scheduled to brief Parliament on Friday on the state of the negotiations.
Greece and its creditors have worked on dueling proposals all week after a meeting in Berlin on Monday that brought together Chancellor Angela Merkel of Germany; President François Hollande of France; Ms. Lagarde of the I.M.F.; and the European Central Bank president, Mario Draghi.
Also present at the meeting on Monday was Mr. Juncker, who as head of the European Commission — the executive arm of the European Union — is playing the role of broker for the negotiations between Greece and its creditors. It was in that role that he met with Mr. Tsipras in Brussels on Wednesday night.
And yet, in comments to Greek television on Thursday, Alexis Mitropoulos, the deputy speaker of Parliament and a prominent lawmaker of Syriza, accused Mr. Juncker — who is widely perceived as friendly to Greece — of “delivering the most vulgar, murderous and tough plan when everyone was looking toward the negotiations closing.”
On another television station, Thodoris Dritsas, the shipping minister, vowed on Thursday that Greece would not give in.
“If what our partners want is full surrender, they’re not going to get it,” he said. “If Europe goes crazy, then the people can decide,” he added, apparently referring to the possibility of holding new elections in the event of a deadlock.
Some analysts remain skeptical about the fate of any agreement that might finally be reached.
“On balance, the deal as it emerges in its current shape and form will be impossible for Tsipras to sell at home,” said a report by Teneo Intelligence, a London research group. Much will depend on whether the Greek prime minister can manage to secure further concessions, the report added.
Ms. Lagarde, the I.M.F. chief, indicated at her news conference on Thursday that important members of the creditors’ camp were taking a softer approach to Greece as they seek a compromise that will enable the country to repay its debts without further damaging its economy. Some source say that it's no wonder given the fact that a rendez-vous with Alexis is arranged for this evening. Apparently Mr. Tsipras didn't have the heart to 'do anythingit takes' with Ms Merkel. People familiar with the arrangements are sure, though, that tonights meeting will be a bit more 'easy' for Mr Tsipras.
She said she endorsed statements by Mr. Draghi, who said on Wednesday that any program for Greece should contain “social fairness.”
And Ms. Lagarde said that eurozone leaders with whom she met in Berlin on Monday had worked to draft a proposal for the Greek government that “clearly demonstrated significant flexibility” on issues like government spending and labor regulations and would “take into account the political and social situation” in Greece.
But back in Athens, Mr. Tsipras continued to take a hard line. The prime minister met with Yanis Varoufakis, the country’s finance minister, and Euclid Tsakalotos, the Greek official who is coordinating the debt negotiations.
It all comes down to Ms Lagarde 'flexibility' and Mr Tsipras 'hard' line, sources say.
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