IMF : Greece has right to “bundle” four June payments into one

Greece’s deadline for repayment to the International Monetary Fund is coming close, while the options for agreement with creditors remain unclear. Without agreement there is no bailout funding for cash-strapped Greece that struggles to avoid a “credit event” on June 5th, when €300 million are due to the IMF. Greece’s obligations to the Fund sum up to €1.6 billion by June 19th. Two days ago, a scenario claiming that Greece could bundle the four repayments to the IMF into one made the rounds.

IMF’s spokesman William Murray confirmed this scenario on Thursday, saying that Greece has the right to do so and make all four payments at the end of the month, and that this has happened already once in the 1970’s with Zambia.

Murray said also that so far there has been no relevant request by Greece.

Transcript of Murray’s press conference via the IMF’s official website:

QUESTIONER: Has Greece requested the bundling of the four upcoming payments into one? What’s the IMF’s position on that? Who makes such a decision, the MD or the board, and is this something common? Has it happened before?

MR. MURRAY: Thanks for those questions. The short answer is, no, there’s been no request for this bundling which has gotten attention in the media, I think, in the past week. Not specific to Greece, because there has been no request for bundling, but a country, just for background here, for your guidance, countries do have the options of bundling when they have a series of payments in a given month. They have the option of bundling, making a single payment at the end of that month. This is a policy that was adopted back in the 1970s. It is rarely used. I’m only aware of one case and it was back in the mid-80s in which a country bundled payments to the Fund.

QUESTIONER: Do you know which country?

MR. MURRAY: Yes. My understanding is that it was Zambia.

QUESTIONER: And who makes such a decision?

MR. MURRAY: It’s a request by the authorities. It’s a notification by the authorities that they’re going to bundle. This policy was adopted by the Executive Board, so if a country says, you know, we have four payments due in the month of June, we’re going to make a payment on June 30, single payment on June 30. They’re quite entitled to do it if they want.

QUESTIONER: The Greek authorities have threatened not to pay the IMF for the next three payments. Are you confident that they will repay the IMF, and what can happen if they don’t? Can Greece be eventually excluded from the IMF, is it something that belong to the range of options?

MR. MURRAY: Thanks. To say they’ve threatened, that characterization isn’t the case. Our understanding, and Mr. Varoufakis and others have stated that, is that they intend to pay the Fund. So as we stand here right now we expect the Greek authorities will pay us.

QUESTIONER: And what can happen if they don’t?

MR. MURRAY: For any country that doesn’t meet its commitments to the Fund there’s a process, a very long process over time, but initially the process is they’re declared in arrears and they have no access to IMF financing.

QUESTIONER: So could you walk us through that mechanics? The first payment, when exactly is it due, like what date and what time? And how quickly will the IMF, you know, send a cable to Greece saying you missed this payment?

MR. MURRAY: I don’t have that granularity in terms of do we send a cable or anything like that. I mean, I think the policy in 1970 on bundling was a result — Telex was widely in use back in the 70s, but I’m not sure about cables right now. It’s basically at close of business on the date of the payment that’s due a country would be declared in arrears.

QUESTIONER: Close of business in Greece or here?

MR. MURRAY: Here. Yeah, it’d be, you know, midnight. It’s not that hard and fast, but it’s — we give them a day, you know, the day that it’s due.

QUESTIONER: I mean, you just said that they couldn’t have access to IMF financing there if they missed a payment. This is —

MR. MURRAY: If a country, I’m not being predictive here by any stretch on any country right now, but if a country fails to meet its financial commitment to the Fund, which is a repayment of what’s due, it is declared in arrears and under our policy it no longer has access until it makes good on those arrears. It no longer has access to fresh financing.

What is also worth noting is that Murray said that the IMF cannot conclude its Greece’s review with only a few measures as Greece allegedly wants.

The IMF’s position is clear: No review, no money.

PS Zambia? We are getting close as the Zimbabwe of the European South…