The Greek government had to tap emergency reserves in its holding account at the International Monetary Fund in order to secure the 750 million euros that were required to pay the IMF dent installment on May 12, noted a Greek central bank official.
Member countries of the International Monetary Fund are required to keep a holding account which may be used for emergencies but the money can only be used with the lender’s approval, a Greek central bank official told Reuters. In order to avoid going into default Athens decided to use the reserves. In fact, according to Greek government officials this solution was proposed by the Bank of Greece Governor Yannis Stournaras.
According to Reuters, the government used around 650 million euros from the IMF holding account and added another 100 million euros from its own cash reserves. “The negative is that the account was emptied but in order to avert a default it was necessary to weigh the options,” the Bank of Greece official said.
Furthermore, the Greek Prime Minister Alexis Tsipras was able to stay true to his word and not use any cash from the available funds to pay the installments, thus staying within the “red lines.”
“We have ensured the wages and pensions for May. We had made it clear that we would not pay if there was not enough money to cover wages and pensions,” noted a government official.
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