Bank of Greece Chief Against Postponement of IMF Repayment

christine_LagardeBank of Greece (BoG) governor Yiannis Stournaras expressed his disagreement over the government’s decision to skip the scheduled repayment to the International Monetary Fund (IMF) and bundle all installments for June 30.

Stournaras reportedly asked the government to avoid such a move because, he said, it damages the country’s image and may have unpleasant consequences. “We are putting Greece in the same category with Zambia,” Stournaras allegedly said, referring to the African country that bundled repayments to the IMF in the 1980s.

According to international media reports, Greece has become the first developed country to skip a scheduled repayment to the IMF.

The IMF said the Greek authorities pledged to pay the entire 1.6 billion debt due this month on June 30. The move is consistent with legislation introduced in 1970 and it is technically acceptable under IMF rules.

IMF officials were surprised by the Greek government’s decision to postpone the repayment. During an IMF press conference on Thursday, Managing Director Christine Lagarde said that Greek Prime Minister Alexis Tsipras assured her that the payment will be made on time on June 5 and that she was “confident” that Greece would meet its obligation.

Financial analysts say that the repayment postponement may trigger a reaction by the European Central Bank (ECB), which may cut Emergency Liquidity Assistance (ELA) to Greek banks.