Wednesday, July 01, 2015

Greece becomes first developed nation to default on international obligations...

The International Monetary Fund has confirmed that it didn't receive the €1.5 billion payment from Athens that was due by the end of June 30, Brussels time, as Greece becomes the first developed country to default on its international obligations.

IMF spokesman Gerry Rice said in a statement that Greece had asked for a repayment extension earlier on Tuesday and that the Fund’s board will consider it “in due course.”

The news hardly comes as a surprise. On Tuesday, Greek Finance Minister Yanis Varoufakis told journalists that Athens would not make the IMF debt payment on time.

Skipping a payment to the IMF is referred to as arrears – owed money that should have been paid earlier – in the terminology of the Fund. It should be officially reaffirmed by the IMF chief Christine Lagarde who in a month should notify the Executive Board of the Fund.

In fact, this could be classified as a default, as any other failure to pay its debt on time. This could trigger a cross-default on Greece's multibillion-dollar commitments to the European Financial Stability Fund (EFSF). The IMF cannot issue new loans the country, which has arrears.

 The question now is what’s next for the country’s financial system, the people and its membership in the Eurozone. Source...

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