Greece refuses to pay IMF

New single payment is unlikely without financial assistance

Late yesterday the Greek Government announced that it would delay four payments due to the International Monetary Fund (IMF) this month, rolling them up into a single €1.6 billon payment to be made on 30 June 2015. Prior to this amendment the first payment, for just over €300 million, was scheduled to be made today.

Whilst the bundling of payments is allowed under IMF rules and is not without precedent, the change highlights how desperate the liquidity situation is in Greece. Although the announcement may also be designed to increase pressure on the creditor institutions, and to allow Prime Minister Tsipras to demonstrate to his own party that he is taking a hard line in negotiations.

In any case, it is doubtful that Greece will be able to make the payment without fresh financial assistance come 30 June 2015.

The latest developments increase the probability that, for a deal to be passed, some form of political reconfiguration in Greece will be required. In this situation the potential for either a referendum or fresh parliamentary elections come back into play. So far Greek opinion polls indicate strong support for continued Euro membership, although sentiment could change if the public believes unreasonable demands are being made of the country.

Bill Street – Head of investments for Europe, the Middle East and Africa (EMEA) – State Street Global Advisors