IMF default by Greece looms on Thursday a day after its Prime Minister meets Russian President Vladimir Putin

Posted on 05 April 2015 with 1 comment from readers

Greece no longer has enough money to pay the International Monetary Fund €458m coming due this Thursday nor to cover salaries and social security due on April 14th, unless the eurozone agrees to disburse the next tranche of its interim bail-out deal.

The IMF is an autonomous organization designated as the specialized agency that index as a medium of consultation to solve the

  • International monetary problems
  • Facilitate the stable growth of the internationally conducted trades leading to creating the provision for increased employment and thereby elevating the income received by all its members

Meanwhile the Greek Prime Minister Alexis Tsipras is to meet the Russian Prime Minister Vladmir Putin on Wednesday and could threaten to veto any further European Union sanctions on Russia to blackmail the economic bloc into providing more money for his bankrupt country.

IMF default

Missing a payment to the IMF would be a first. No developed country has ever defaulted to the Bretton Woods institution. While there would be a grace period of six weeks before the IMF board declared Greece to be in technical default, the process could spin out of control at various stages with immediate uncertainty hitting financial markets hard.

Greece already has emergency plans to nationalise the country’s banking system and introduce a parallel currency to pay bills unless the eurozone comes up with the cash. The IMF has called Greece its worst client in 70 years, quite a rebuke from the most diplomatic financial agency in the world.

Is Greece now coming to the end of its long and tortuous road to national bankruptcy? Some Greeks feel they were betrayed from the first bail-out that should have included massive debt relief or a default by any other name. Still that is ancient Greek.

Impossible case

How many times can the institutions of the EU and IMF put humpty dumpty back together again, especially when he won’t sit still on the wall for longer than five minutes? Vladimir Putin has already said there will be no Russian money for Greece. Russia does not want its bad debts either.

However, Greece is going to be very short of friends if it finally does the dirty on the rest of Europe. A return to the drachma is a nightmare and any international investors foolish enough to think they can make money out of this should beware Greeks offering false gifts.

Any country that can default on the IMF cannot be trusted with your money, can it? Mr. Putin has a point. Global stock markets will plummet, bonds and precious metals will rocket in value.