Creative debt repayment. Reminds me the joke of a 100-euro bank note circulating in a village, enabling residents to repay their debts. One day before the deadline for a repayment to International Monetary Fund, Finance Minister Yanis Varoufakis reportedly gave the order: “Pay the tranche to the IMF!”. Immediately 750 million euro left Athens and were booked to IMF’s bank account over the Atlantic. (OK, it could have been an IMF account in a Swiss bank… just kidding!).
But where did Greece find the money to pay the IMF, when the whole media and political world in and outside the country claims the country has run out of cash and it could either pay the IMF-creditor or salaries and pensions at the end of this month?
According to Reuters and some other media outlets:
Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro ($839 million) debt payment to the Fund on Monday, two government officials said on Tuesday.
One official told Reuters that Athens used about 650 million euros from the holding account to make the payment.
“We made use of money in our holding account in the fund,” the official said, declining to be named. “The government also used about 100 million of its cash reserves.”
A second Greek official said on Tuesday that the reserves the government tapped must be replenished in the IMF account in “several weeks.” (full article Reuters)
Following legislative changes, Greece has meanwhile gathered 600 million euros of local government and other public entity money to help it deal with the cash crunch, the government’s spokesman said on Tuesday.
A German news website reports that Greece managed to repay the IMF by simply delaying the payment of its annual membership fee of a little below €660 million to the IMF.
“Therefore it is only €90 million which Athens must effectively transfer Athens. There is no deadline for the payment of the annual fee but a deadline for the repayment (May 12th). As a result, the delay of the annual fee does not count as a credit event as the delay in payment does. However, this practice cannot go well for a long time.” (heise.de)
Finance Minister Yanis Varoufakis said on Monday that rhe liquidity situation was “terribly urgent” and a deal to release further funds was needed in the next couple of weeks.
Following legislative changes, Greece has meanwhile gathered 600 million euros of local government and other public entity money to help it deal with the cash crunch, government spokesman Gavriil Sakellaridis said on Tuesday, Reuters reported.
Greece has not received bailout money since August 2014 and keeps paying its creditors by own resources.
And while the government struggles to reach a deal and have the last bailout tranche of €7.5 billion booked on its bank account, the average Greek struggles to get euro money together to cover daily needs and pay taxes, arrears and social security contributions.
PS A lot of struggle has been going on lately…
“Greece has not received bailout money since August 2014 and keeps paying its creditors by own resources.”
Well – what would you consider ELA that is directly used by Greek banks to purchase short term Greek government T-Bills?
You can fool yourself, you can fool Syriza’s voters, but do not believe that you can fool the creditor nation’s taxpayers.
They are way better informed thank the typical Syriza propaganda victim.
lol you mean the state gets the money from the banks and give it to lenders?
That’d be a sure bet.
Use T-Bill to get Euros through ELA, then use Euros to get another T-bill.
Talk about the €100 bill going round and round…
Suggestion:
1. Greece defaults on all sovereign debt payments, including interest payments;
2. Greece introduces import certificates (Warren Buffett’s idea) to guarantee that there will be money to pay for imports;
3. Greece directs all available funds resulting from not making any debt related payments towards productive investment in order to increase exports;
4. Stay in the euro area in order to guarantee the availability of means of international payments.
Slowly the economy will start growing, unemployment will start falling, government revenues will increase.
The ‘joke’ which you recounted at the beginning of this report has more validity than first realized – when one considers that the world operates on a monopoly type money basis – here’s an update of that joke.
A German tourist came into a Greek hotel and said he wanted to book a room for the night which was 50 euro. He paid the owner 50 euro.
The hotel owner ran around to the butcher to whom he owed money and paid the butcher 50 euro to settle his account.
The butcher rushed around to his meat supplier to whom he owed 50 euro and settled his bill.
The meat supplier rushed to the man who supplied his packaging to whom he owed 50 euro and settled his debt.
The package supplier had on the strength of receiving this money taken a short break – he therefore rushed to the Greek hotel and paid for the nights stay he had had on the slate for months.
The German tourist returned to the Greek hotel later that day and stated he no longer wished to stay for the night could he please be reimbursed his 50 euro as he was extremely short of money and need to pay a debt.
The Greek owner smiled and said I could of course debate your problem, I could delay payment, but I am an honourable man here’s your 50 euro sir, please visit us again.
The moral of this story is that no one along this chain of events lost out – the butcher – the meat supplier – the packager and the hotel all received money to eradicate their debts A
The Greek hotel owner offered – no haggling – no delays – no excuses but simply refunded his money.
thank you, Molly for posting the joke. in my version it was 100 euro, but that was probably BEFORE the economic crisis 🙂