Lagarde says she won’t support Greece missing payment to IMF
Christine Lagarde, managing director of the International Monetary Fund, warns she won’t let Greece skip a debt payment to the lender, shutting down a potential avenue to buy the Greek government some financial leeway.
“We never had an advanced economy actually asking for that kind of thing, delayed payment,” Lagarde said in an interview Thursday in Washington. “And I very much hope that this is not the case with Greece. I would certainly, for myself, not support it.”
Greek officials told their creditors earlier this month that they might run out of money and miss a repayment to the IMF, according to three people familiar with the negotiations. The payment went through, and Greece’s warning was seen as just an element of the ongoing discussion, one of the participating officials said.
Greece must pay the IMF roughly $1 billion next month. Missing a payment would put Greece in a club that includes Zimbabwe, Somalia and Sudan, countries that hold the dubious distinction of having fallen into arrears with the fund. Lagarde said the IMF hasn’t allowed a country to delay a debt payment in 30 years.
At the same time, a skipped payment to an official creditor wouldn’t constitute a trigger to lower Greece’s rating to selective default under Standard & Poor’s criteria, the rating agency said Wednesday as it cut Greece’s rating to CCC+.
Greek bonds plunged Thursday, pushing the yield on notes due in 2017 to the most since the height of the euro-area debt crisis in 2012, amid speculation the country won’t secure the release of aid needed to meet its obligations.
Greek Finance Minister Yanis Varoufakis inquired this month during talks with the IMF what would happen if Greece missed a payment to the lender, a person briefed on the matter said.
Varoufakis said in an email that he never asked to be informed about the process of skipping a payment to the fund, saying such suggestions are outright lies. The Financial Times first reported earlier Thursday that Greek officials had approached the IMF about not making a payment. Varoufakis met with Lagarde in Washington later Thursday, according to the Greek Finance Ministry.
Talks on resolving the financial crisis must “intensify” if euroregion finance ministers are to be able to assess the country’s reform commitments when they meet at the end of next week, the European Commission said Thursday.
“At this stage, we are not satisfied with the level of progress,” Margaritis Schinas, spokesman for the European Union’s executive, told reporters in Brussels. “Everything is now on the table and what we need is to progress swiftly.”
Greece has not yet produced the “full list of reforms” demanded by EU leaders at a summit last month, Schinas said. The proposals must be assessed by the European Commission, the European Central Bank and the IMF before the country can get any additional payments from a 240 billion-euro ($258 billion US) bailout.
German Finance Minister Wolfgang Schaeuble, in an interview Wednesday in New York, ruled out further concessions to Greece, saying it’s up to Prime Minister Alexis Tsipras’s government to commit to the reforms needed to release aid rather than give false hopes to its people.
Schaeuble, asked about a report in German weekly Die Zeit that his office was working on a plan to keep Greece in the euro area if the country defaulted, denied the report while saying that ministry staff were “taking just about everything into consideration.”