Greece completes latest payment to IMF

Athens has issued an order for its latest debt payment of €754m to the International Monetary Fund to be executed.

The news, first reported by Reuters, came ahead of Monday afternoon’s meeting of Eurozone finance ministers.

Writing ahead of the result of Monday’s Eurogroup meeting, economists at RBS said they expected a positive statement to emerge from the gathering but no agreement on releasing further bailout funds to the troubled Mediterranean nation.

However, “a statement alone would probably not be enough to release any bailout funds or allow the ECB to raise the cap on the amount of Treasury bills the Greek banks can buy”, RBS explained in a research note e-mailed to clients.

Greece’s international creditors have been demanding the country carry out macroeconomic reforms, with the opposite having been the case in various instances since the new Syriza government came to power.

Nonetheless, agreement has been reached on establishing a flat 18% rate of VAT continuing privatisations and raising the retirement age to 65.

Tensions in debt markets and the higher financing costs which have ensued mean that Athens is no longer projected to run a primary government surplus this year. Indeed, the European Commission’s latest forecast published on 6 May was for Greece's economy to grow by just 0.5% in 2015.

In the run-up to Monday’s negotiations Greek officials had said Athens wanted to make the payment due on 12 May, and had sufficient funds to do so, but that some would rather withhold payments pending a favourable outcome at the meeting.

Including those €754m owed to IMF on Tuesday, Greece was facing €11.4bn of obligations due in May and June.

“Our base case remains that Greece and its creditors will reach a compromise agreement to disburse part of the €7.2bn of bailout funds. A missed payment may expedite capital controls and an election or referendum on a deal, but would not necessarily mean a Euro exit, and is not our base case,” RBS added.

As of 16:37 the yield on the benchmark 10-year Greek government bond was unchanged at 10.88%, having hit an intra-day low of 10.71% and the session high at 10.90%.