(From the Guardian) Greece has delayed a debt repayment to the IMF of €300m. The instalment was due on Friday 5 June, but instead the country has said that it will bundle all four of this month’s payments into one €1.6bn settlement that it will pay on 30 June.
However, if Greece fails meet the obligation at the end of the month it will then most probably default. And to make matters even more pressing, the country’s current bailout deal expires on the same day as its IMF bill falls due.
In the event of a delayed repayment, according to IMF protocol, Greece would be afforded a 30-day grace period, during which it would be urged to pay back the money as soon as possible, and before Ms Lagarde notifies her executive board of the late payment.
Following this hiatus, a technical default could be declared a month later, when “a complaint regarding the member’s overdue obligations is issued by the Managing Director to the Executive Board”.
Should no money be forthcoming however, the arrears process may well extend indefinitely.
Here’s a history countries with protracted arrears (defined as overdue financial obligations for six months or more) with the fund:
Cambodia (1975-92), 36.9m SDR (special drawing rights)
Nicaragua (1983-85), 14.4m
Guyana (1983-90), 107.7m
Chad (1984-94), 4.1m
Vietnam (1984-93), 100.2m
Sierra Leone (1984-86), 25.1m
Sudan (1984-present), 979.8
Liberia (1984-2008), 543m
Tanzania (1985-86), 22.9m
Zambia (1985-86), 115.1m
The Gambia (1985-86), 10.6m
Peru (1985-93), 621m
Jamaica (1986-87), 50m
Zambia (1986-95), 830.2m
Sierra Leone (1987-94), 85.5m
Somalia (1987-present), 234.6m
Honduras (1987-88), 3.3m
Panama (1987-92), 180.9
Democratic Republic of the Congo (1988-89), 115.4m
Haiti (1988-89), 9.2m
Honduras (1988-90), 27.5m
Iraq (1990-2004), 55.3m
Dominican Republic (1990-91), 24.3m
Democratic Republic of the Congo (1990-2002), 403.6m
Haiti (1991-94), 24.8m
Bosnia and Herzegovina (1992-95), 25.1m
Yugoslavia (1992-2000), 101.1m
Central African Republic (1994-94), 1.6m
Afghanistan (1995-2003), 8.1m
Zimbabwe (2001-present), 81.1m
(amounts in US$)
What is evident browsing through this list, from Cuba and Cambodia to Sudan and Yugoslavia, is that many of the countries that are on it were characterised primarily by domestic or regional violence, if not by outright war, during the years in question.
The same is true of the longer history and list of sovereign defaults. Many nations that went through extreme financial hardship (again, with notable exceptions such as the recent case of Argentina), and eventually were unable to meet their obligations, often did so not due to economic and political mismanagement alone, but following periods of conflict, civil war, revolutions, world wars or after the collapse of old empires.
What is different about Greece
The fact that in 2015 a country in the European Union – one of the most prosperous and peaceful areas in the world – is potentially weeks away from a default is an extraordinary outlier.
And the amount of the loan Greece received is the biggest ever given by IMF to any country.