Greek state repays IMF loan instalment despite growing cash crunch

ATHENS, Greece – Greece repaid a roughly 450 million euro ($485-million) loan instalment to the International Monetary Fund due Thursday — easing concerns, for now, of a potential default as Athens faces a cash crunch.

The IMF debt stems from Greece’s international bailout, under which the country was extended 240 billion euros in rescue loans from other eurozone countries and the IMF to prevent bankruptcy.

Athens’ growing financial problems had renewed fears the country might miss the IMF payment and even have to leave the eurozone.

Greece’s new left wing-led government has been locked in negotiations with creditors since winning elections in January on pledges to abolish the deeply resented budget austerity measures required by the rescue program.

The creditors are insisting on the reforms, however, and want an agreement on them before they unfreeze Greece’s rescue loans, which have been on hold since August. A last installment of the bailout worth 7.2 billion euros is pending.

Finance Minsiter Yanis Varoufakis, speaking at a conference in Paris on Thursday, said Greece was committed to a fiscal plan that made sense, but that the government would not sign a deal just to get the bailout tranche.

“The only way I know that you can impress upon the other side of the negotiating process that you mean business, that you want to change the conversation, is by saying: Folks, we are not going to sign on the dotted line of anything you give us just to get the next loan tranche,” Varoufakis said.

“At the very same time,” he added, “we need to have a fiscal plan that makes sense. At the moment Greece is committed.”

Greece is unable to tap the international bond market for funds due to sky-high borrowing rates that reflect a lack of confidence in the country being able to repay its debts. It has been surviving on its rescue loans since mid-2010, and the new government won a four-month extension to the main, European part of its bailout in February.

Under the extension agreement, Athens must present a series of fiscal measures to reform its economy that meet the approval of its creditors at the European Commission, European Central Bank and IMF. Authorities are hoping for a final agreement later this month, when finance ministers from eurozone countries meet on April 24 in Latvia.