Greek bailout: European shares slump after Greece postpones IMF paymentComments Off on Greek bailout: European shares slump after Greece postpones IMF payment
The FTSEurofirst 300 shed 0.6%, putting the pan-European shares index on course for its biggest weekly fall since December.
“By postponing today’s payment, Greece de facto acknowledges that it is running out of money fast,” said Holger Schmieding of Berenberg Bank.
Some analysts pointed to the rising risk of a political explosion in Greece as creditors seek to force Alexis Tsipras’s radical Syriza government to break some of its manifesto commitments in exchange for €7.2 billion (£5.3 billion) in bailout funds.
Deposits have been flowing out of Greece’s banks as domestic savers fear the imminent imposition of capital controls.
That has forced the country’s lenders to rely on ever more emergency liquidity funding from the European Central Bank.
Yesterday, the IMF revealed that Greece has asked late in the day to exercise an obscure clause which allows debtors to bundle repayments due to the IMF over a month to the end of the month, despite previous assurances from senior Greek ministers that today’s €300 million payment would be made.
The last government to exercise this right was Zambia in the 1980s.
Greece must now pay €1.6 billion on June 30 or be in technical default — something that could see its banks unable to borrow any longer from the ECB.
There are growing signs that Athens will be unable to make the payments unless it receives the bailout funds from its creditors.
Alexis Tsipras is to address the Greek parliament today (Picture: Alkis Konstantinidis, Reuters)
Tsipras was presented with a “take-it-or-leave-it” list of reforms by the European Commission, the European Central Bank and the IMF in Brussels on Wednesday.
He will address a restive Greek parliament, where Syriza holds a majority, this afternoon, with reports suggesting he is set to call on the country’s creditors to “get realistic” and ease demands that Greece dismantle labour market protections, cut public pensions and run a substantial primary budget surplus.
There are growing signs of serious splits within Syriza, which could prevent Tsipras reaching an agreement with creditors even if he wished to.