Greece relied on emergency reserves to make a debt interest payment to the International Monetary Fund, a sign the far-left government of Alexis Tsipras has all but run out of funds less than two months before a crucial deadline.
Greece raided its emergency account to make a €750 million payment to the IMF, according to Syriza official Dimitris Vitsas. Athens used €650 million from an escrow account at the IMF and relied on emergency cash reserves to come up with an extra €100 million. With the move, Athens inched another step closer to running out of cash, putting it on a collision course with default.
Greece has until the end of June to reach an agreement with creditors or risks defaulting on its loans and exiting the Eurozone.
The IMF, an international lending institution representing 188 countries, is part of the troika of international lenders that have supplied Athens with €240 billion in bailout aid since the 2008 global financial crisis. The European Central Bank and European Commission make up the other two institutions propping up Greece.
Greece and its Eurozone partners have been unable to reach an agreement on a new bailout structure. The country’s lenders are withholding further bailout aid until Athens commits to a series of economic reforms that have been dubbed “austere” by the ruling far-left Syriza party. Talks between both sides have broken down repeatedly in recent months. Greece has vowed it would not implement reforms that conflict with its campaign promises.
The IMF is prepared to pull the plug on Greece should it not implement the stated reforms, according to Spanish paper El Mundo. IMF officials reportedly told Eurozone finance ministers they do not believe Athens is willing to cut spending and raise tax revenues. The IMF is reportedly prepared to withhold rescue aid valued at up to €50 billion as a result.
According to estimates, Greece has less than €100 million in spare reserves left, which means it will not be able to make wage and pension payments this month. Those payments are valued at €1.7 billion.
Greece owes the IMF €9.7 billion in 2015.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.