Cyprus Mail

Cash-strapped Greece repays first part of IMF loan due in March (Updated)

By George Georgiopoulos and Lefteris Papadimas

Greece repaid on Friday the first 310 million euro instalment of a loan from the International Monetary Fund that falls due this month as it scrambles to cover its funding needs amid a cash crunch.

Prime Minister Alexis Tsipras’ newly elected government must pay a total of 1.5 billion euros to the IMF this month over two weeks starting on Friday against a backdrop of fast-depleting cash coffers.

“The payment of 310 million euros has been made, with a Friday value date,” a government official told Reuters, requesting anonymity.

Athens has to pay three other instalments, on March 13, 16 and 20 as part of repayments due to the IMF this month.

Tsipras’ government has said it will make the payments but there has been growing uncertainty over Greece’s cash position as it faces a steep fall in tax revenues while aid from EU/IMF lenders remains on hold until Athens completes promised reforms.

Athens sent an updated list of reforms on Friday to Brussels ahead of a meeting of euro zone finance ministers on Monday, a Greek government official said, adding that the list expanded on an earlier set of proposals.

The list includes measures to fight tax evasion and red tape and facilitate repayment of tax and pension fund arrears owed by millions of Greeks, the official said. It also proposes a “fiscal council” to generate savings for the state.

Athens is running out of options to fund itself despite striking a deal with the euro zone in February to extend its EU/IMF bailout by four months.

Greece has monthly needs of about 4.5 billion euros, including a wage and pension bill of 1.5 billion euros. It is not due to receive any financial aid until it completes a review by lenders of final reforms required under its bailout.

Greece’s central bank chief, Yannis Stournaras, said after talks with Tsipras on Friday that Greek banks were sufficiently capitalised and faced no problem with deposit outflows.

“There is full support for Greek banks (from the ECB), there is absolutely no danger,” he said after the meeting. But he added Monday’s euro zone meeting had to be “successful”.

The ECB will resume normal lending to Greek banks only when it sees Athens is complying with its bailout programme and is on track to receive a favourable review, ECB President Mario Draghi said on Thursday.

Athens has begun tapping cash held by pension funds and other entities to avoid running out of funds as early as this month. Various short-term options it has suggested to overcome the cash crunch have been blocked by euro zone lenders.

Tsipras’ leftist Syriza was elected on Jan. 25 on a promise to end the belt-tightening that came with the EU/IMF bailouts.

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