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Did Greece indeed "pay" IMF some €750M on May, 12?

13 May 15 | Liz Alderman
Liz Alderman

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Antulio Richetta

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Chief European business correspondent for the Paris-based International New York Times, Liz Alderman argued that Greece’s tactic to be always about to run out of cash but eventually not, seems to be established as a pattern after all.

 

Greece’s vicious debt cycle it is a familiar pattern in Europe. Greece manages to avoid defaulting on its debts and then returns to haggling with its creditors over getting more financial aid.

Unfortunately, it's a game that Greece is not likely to keep up for long, Liz Alderman writes in The New York Times.

Greece managed on Tuesday to make a loan payment of about €750 million, or about $837 million, to the International Monetary Fund, but that payment is representative of the country's cycle of dependence on creditors:

The money came from a special reserve the I.M.F. requires all of its member nations to maintain. "In other words, Greece used I.M.F. money to pay the I.M.F.," Ms. Alderman writes.

Economists warn that without debt forgiveness, Greece is likely to collapse under the weight of its €324 billion debt and a declining economy.

"Last year's momentum, along with the beneficial impact of lower oil prices and a weaker euro, is being overwhelmed by increased capital flight and policy uncertainties as negotiations with European partners drag on," said Mohamed A. El-Erian, the chief economic adviser at Allianz and a former executive at Pimco.

The longer this economic and financial situation persists, he said, "the larger the risk of a large accident - a Graccident - that would undermine further Greece's recovery potential and cause even greater human tragedy."

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