Greece to delay IMF repayment as Tsipras faces backlash - Financial Times

http://www.ft.com/intl/cms/s/0/499e2286-0a97-11e5-a8e8-00144feabdc0.html?siteedition=intl#axzz3cCAeH2a6

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/499e2286-0a97-11e5-a8e8-00144feabdc0.html#ixzz3cCB3mdSN

Last updated: June 4, 2015 6:33 pm
Greece to delay IMF repayment as Tsipras faces backlash
Kerin Hope in Athens and Peter Spiegel in Brussels

Greek Prime Minister Alexis Tsipras delivers a speech during the Economist conference entitled "Europe: The comeback ? Greece: How resilient?" in Athens on May 15, 2015. Greece's left-wing government will not abandon its defence of social rights and salaries in tough talks with its EU-IMF creditors, Prime Minister Alexis Tsipras said. AFP PHOTO/LOUISA GOULIAMAKI (Photo credit should read LOUISA GOULIAMAKI/AFP/Getty Images)©AFP
Alexis Tsipras. Greek prime minister
Greece has notified the International Monetary Fund that it will not make a scheduled €300m loan repayment on Friday after opposition to a bailout compromise with creditors erupted inside the governing party.
Following a rarely used procedure permitted under IMF rules, the Greek government intends to bundle all the payments it owes in June totalling €1.5bn and transfer it at the end of the month.




Alexis Tsipras, the Greek prime minister, has come under intense pressure from within his left-wing Syriza party to withhold payment to the IMF as a sign of the country’s defiance to terms required by its international creditors to access desperately-needed €7.2bn in bailout aid.
But as recently as early Thursday morning, Mr Tsipras had signalled his government intended to make the payment. Asked by reporters after a four-hour Brussels meeting with Jean-Claude Juncker, European Commission president, whether the instalment would be made, the Greek prime minister said: “Don’t worry about that.”
Christine Lagarde, the IMF chief, had also said earlier on Thursday she was “confident” Athens would make the payment and dismissed talk that Greece would opt for the bundling option, last used by Zambia in the 1980s.
But according to a Greek central bank official, Athens made the request late on Thursday. Gerry Rice, the IMF spokesman, confirmed the request, saying the rule allows countries “to address the administrative difficulty of making multiple payments in a short period.”
However, senior IMF officials believe that any non-payment by Athens would be a political decision rather than a financial one; in an economy as large as Greece’s, €300m is a relatively small sum and Greek officials had been working to raid undisbursed EU funds for infrastructure projects to cover the payment as well as another €350m instalment due to the IMF on June 12.
As a result, Greece’s decision — coming less than 24 hours after Mr Tsipras was presented a five-page list of policy commitments by Mr Juncker that Athens needed to implement to win the €7.2bn in aid — will be seen as a negotiating tactic as well as a sign of a shortness of cash.
“This move is almost unprecedented and based on Tsipras’s comments yesterday unexpected,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy. “It unnecessarily raises the stakes and will further undermine the goodwill of Greece’s creditors.”

Ever since an emergency summit meeting of EU leaders hosted Monday in Berlin by Angela Merkel, the German chancellor, eurozone officials have been concerned that many of the terms in a compromise plan hammered out by Greece’s warring creditors would be unacceptable to Syriza.
Some eurozone officials believe Mr Tsipras will be forced to move to elections if he accepts creditors terms, which includes demands that Athens make public-sector pension cuts of 1 per cent annually starting next year. The pension measures, demanded by the IMF but resisted by the European Commission, were one of Athens’ most important “red lines” in negotiations.
In a sign of how fraught the political situation had become for Mr Tsipras, he was forced to put off an expected second round of talks in Brussels with Mr Juncker to address his parliament on Friday night.