Coverage: Greece misses IMF payment

The Greek debt crisis took yet another turn for the worse as the country missed its payment to the International Monetary Fund, making the country ineligible for more IMF money.

The New York Times story by Jim Yardley and James Kanter had these details on the default:

The International Monetary Fund said shortly after midnight Wednesday that Greece had missed a crucial debt payment to the fund.

“We have informed our executive board that Greece is now in arrears and can only receive I.M.F. financing once the arrears are cleared,” said Gerry Rice, a spokesman for the fund.

Greece is not technically in default, but missing the payment is yet another an unmistakable warning that the country will probably be unable to meet its other obligations in coming weeks, to its bond holders and to the European Central Bank. That may might make the European Central Bank, one of its principal creditors, less willing to continue emergency loans that have been propping up Greek banks for the past several months.

By declaring Greece in arrears, the I.M.F. avoided using the term “default.” Credit rating agencies also will not consider Greece to be in default based on missing the I.M.F. payment, for the technical reason that the I.M.F. is not considered a commercial borrower.

Gabriele Steinhauser, Viktoria Dendrinou and Nektaria Stamouli wrote for The Wall Street Journal that many were questioning the idea of a referendum:

By the afternoon, Prime Minister Alexis Tsipras had asked for a new rescue program—the country’s third in five years—to help pay for some €29.15 billion ($32.52 billion) in debt coming due between 2015 and 2017.

Late Tuesday, Greek officials were also raising doubts over their plans for a referendum planned for Sunday, in which the government had asked its citizens to vote against pension cuts and sales-tax increases demanded by its creditors.

Some officials suggested that Mr. Tsipras and his ministers could campaign for a “yes” if a better offer from the rest of the eurozone and the IMF was on the table, while others indicated that the vote might even be called off altogether.

Whether any of these developments would keep Greece from financial meltdown and secure its spot in Europe’s currency union was still unclear. But the prospect of more rescue loans—however dim—might help buffer some of the effects of the nonpayment to the IMF.

The default threw Greece’s membership in the Eurozone into question, according to Michael Birnbaum of The Washington Post:

Greeks are strongly in favor of remaining with the euro. But they have rebelled against the crushing austerity measures that Europe has demanded in exchange for bailing out the indebted government. Tsipras stunned E.U. leaders last weekend by calling for a July 5 referendum in which he intends to put the European demands to the voters’ test. He has campaigned for a “no” vote, which he says will strengthen his bargaining power with his E.U. counterparts.

Those same leaders have said that such a vote would amount to a decision to leave the 19-nation euro-currency union. E.U. finance chiefs took a hard line on Tuesday’s new bailout request, saying that E.U. nations had the right to request assistance but that any request would be addressed through ordinary, slower channels.

“Politically the situation hasn’t changed. There is no new ground,” Dijsselbloem said after the E.U. finance ministers consulted Tuesday. “The situation in Greece, in the Greek economy, in the Greek banks, has deteriorated even more, unfortunately.”

But it’s not all doom and gloom, according to the USA Today story by Tyler Pager. Tourism remains robust:

Despite Greece’s extreme financial crisis, the country’s lucrative tourism industry appears to be uninterrupted.

And that’s good news for Greeks.

Tourism brought in around $32.7 billion in 2014, which made up more than 17% of the country’s GDP. The industry also contributed to 9.4% of total employment, or 340,500 jobs, according to the World Travel and Tourism Council.

“For international people going on vacation to Greece, there’s absolutely no difficulty at the moment,” said David Scowsill, president and CEO of the WTTC. “Greece is always a very popular destination for Europeans and it’s a good value-for-money destination. If there’s going to be any difficulties, it will come slightly later in this process.”

Although Greek citizens are limited to withdrawing only the equivalent of $67 a day from ATMs, Greece’s Economy, Infrastructure, Shipping and Tourism Ministry released a statement Monday saying those limits do not apply to people using foreign credit or debit cards.

“The tourists that are currently in Greece as well as those that are going to come will not be at the least affected by the latest developments and can continue to enjoy their vacations in Greece without the slightest problem,” said Alternate Tourism Minister Elena Kountoura in a statement.

And that’s good news. If Greece is ever going to dig out of from under its massive debt load, it’s going to need more people visiting and spending money. While most of the world expected the default, many were likely still hoping for a last minute deal.