Greek IMF Repayment Left Country’s Finance on the Brink

Greece emptied an IMF holding account to repay 750 million euros ($840 million) due to the fund, a Greek central bank official said, avoiding default but underscoring the dire state of the country’s finances.

It was not clear how soon the country would be required to replenish the account

With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts about whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.

Greece, like all other International Monetary Fund members, holds reserves from the IMF that are denominated in Special Drawing Rights (SDR), a basket of international currencies. The reserves must be kept at a certain level or the country must pay interest if its holdings fall below its “allocation” of SDRs from the IMF.

A government official told Reuters that Athens used about 650 million euros from the SDR holdings account and 100 million euros from its cash reserves to make the payment on Monday.

The Greek central bank official confirmed the account had been tapped after government officials met the central bank chief last week to figure out how to make the payment.

“The negative is that the account was emptied but in order to avert a default it was necessary to weigh the options,” the Bank of Greece official said.

via Reuters

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza