5 Jun 2015
Greece to miss today’s IMF payment – BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of GMR at Bank of Tokyo-Mitsubishi UFJ, notes speculation is rife that Greece might miss today’s IMF payment and bundle the remaining June payments and repay in one sum at the end of this month.
Key Quotes
“It is being widely reported this morning that Greece today will miss its IMF payment – the first country to do so since Zambia in the 1980s. The FT is suggesting though that this is more about politics than the economics of not having the funds to pay.”
“The non-payment is more a show of defiance and means the payments in June will be bundled together and paid in one sum of about EUR 1.6bn at the end of the month. This is allowed by the IMF but is meant more for countries that struggle due to administrative difficulties to make numerous payments over a short period rather than for a country struggling to pay.”
“It certainly now seems clear that the optimism earlier this week was another false dawn. With the ‘take it or leave it’ deal from the ‘institutions’ apparently rejected by PM Tsipras, the risks of a nasty outcome have certainly increased. PM Tsipras is due to address parliament later today and that’s when we should get greater clarity on where we stand.”
“Nobel Prize-winning economist, Christopher Pissarides has called on Tsipras to hold a referendum. This has been mentioned before by Tsipras but there’s been little mention of it recently. This solution would allow Syriza to accept terms inconsistent with promises made in the election on the premise that the electorate would be consulted again.”
“Syriza clearly promised too much in the election in January and hence a referendum may be the only way out. That has its own risks of course and some temporary deal with Brussels would be required in order to allow time for a vote. The downside is that the markets are then faced with an event that ends with either Greece remaining or leaving the single currency. Risk premiums would definitely rise and volatility would increase. The upside is that over 70% of Greek people still want to remain in the single currency.”
Key Quotes
“It is being widely reported this morning that Greece today will miss its IMF payment – the first country to do so since Zambia in the 1980s. The FT is suggesting though that this is more about politics than the economics of not having the funds to pay.”
“The non-payment is more a show of defiance and means the payments in June will be bundled together and paid in one sum of about EUR 1.6bn at the end of the month. This is allowed by the IMF but is meant more for countries that struggle due to administrative difficulties to make numerous payments over a short period rather than for a country struggling to pay.”
“It certainly now seems clear that the optimism earlier this week was another false dawn. With the ‘take it or leave it’ deal from the ‘institutions’ apparently rejected by PM Tsipras, the risks of a nasty outcome have certainly increased. PM Tsipras is due to address parliament later today and that’s when we should get greater clarity on where we stand.”
“Nobel Prize-winning economist, Christopher Pissarides has called on Tsipras to hold a referendum. This has been mentioned before by Tsipras but there’s been little mention of it recently. This solution would allow Syriza to accept terms inconsistent with promises made in the election on the premise that the electorate would be consulted again.”
“Syriza clearly promised too much in the election in January and hence a referendum may be the only way out. That has its own risks of course and some temporary deal with Brussels would be required in order to allow time for a vote. The downside is that the markets are then faced with an event that ends with either Greece remaining or leaving the single currency. Risk premiums would definitely rise and volatility would increase. The upside is that over 70% of Greek people still want to remain in the single currency.”