Greece defers IMF payment as proposals cross ‘red line’

Greece became the first country to defer a payment to the IMF since the 1980s as its game of brinkmanship with creditors goes down to the wire.

While international officials have reported some progress in recent days, German Chancellor Angela Merkel said that “we’re still far from reaching a conclusion”.

Prime Minister Alexis Tsipras said the troika’s list of proposals crossed his party Syriza’s “red lines”.

The current phase of Greece’s crisis is nearing its conclusion as the country runs out of money after four months of deadlock. Stocks and bonds have been jittery all week amid a flurry of political activity starting with a late-night meeting in Berlin between EU leaders and the IMF on Monday.

Greece rejected the latest proposal from its international creditors, with the finance ministry saying the plan “can’t solve the riddle” and an agreement requires “immediate convergence of the institutions to more realistic” proposals.

Mr Tsipras, who met European Commission president Jean-Claude Juncker in Brussels on Wednesday, will address the Greek parliament at 3pm Irish time, with the eurozone pressing for an agreement to be wrapped up by June 14. A European official said Greece will study the offer from its creditors and come back to them on Monday.

Greece told the IMF it would delay a debt payment of about €301m, due today, submitting a request to the fund to bundle payments totalling about €1.5bn due this month into one lump-sum payment.

“The Greek authorities have informed the fund today that they plan to bundle the country’s four June payments into one, which is now due on June 30,” IMF spokesman Gerry Rice said. “Under an executive board decision adopted in the late 1970s, country members can ask to bundle together multiple principal payments falling due in a calendar month.”

Only one country, Zambia, has used the procedure to bundle payments, which happened in the mid-1980s.

Mr Tsipras, elected in January on a promise to end austerity, returned from late-night talks with EU officials in Brussels to face an outcry over conditions that would breach the “red lines” his Syriza party has declared.

He told ministers the government could not accept “extreme proposals” and said the creditors should understand that the Greek people had suffered enough and they “have to stop playing games at its expense”, a Greek official said.

Mr Tsipras rejected pension cuts and a tax rise on electricity that he said the lenders were demanding along with other conditions to win the release frozen loans and avert a default that could hit eurozone and world markets.

Sources said the creditors’ five-page plan asked Athens to commit to selling off state assets and maintaining unpopular labour reforms — demands that would cross the declared red lines.

The lenders were demanding Greece reduce spending on pensions by 1 percentage point of GDP and raise a 1% or €1.8bn by increasing Vat on products ranging from drugs to electricity.

Reporting by Bloomberg and Reuters