Euro-area officials need to look beyond Greece’s repeat warnings that it may miss a payment and find a long-term solution that shores up the economy to prevent any financial fallout, according to the European commissioner in charge of euro matters.
Greek officials told their creditors earlier this month that they might run out of money and miss a repayment to the International Monetary Fund, according to three people familiar with the negotiations. The payment went through, and Greece’s warning was seen as just one element of the ongoing discussion, one of the participating officials said. IMF spokesman William Murray said the fund had no immediate comment.
“We know that there has been lots of rhetoric on the Greek side during those negotiations,” Valdis Dombrovskis, a European Commission Vice President, said in an interview in Washington on Thursday. “What really matters is what progress we’re making now in negotiations.” He cited technical aspects and “how seriously the Greeks are engaging with preparing the list of structural reforms which needs to be implemented.”
Greek bonds fell, pushing the yield on notes due in 2017 to the most since the height of the euro-area debt crisis in March 2012, amid speculation Greece won’t secure a release in aid required to meet its obligations.
Greek Finance Minister Yanis Varoufakis inquired about what would happen if Greece missed a debt payment to the IMF in talks with the lender this month, according to a person briefed on the matter.
Varoufakis, in an e-mailed statement, said that he never asked to be informed about the process of missing a payment to the fund. The Financial Times first reported earlier Thursday that he had approached the IMF to ask about skipping a payment.
Greece owes the IMF payments next month of roughly $1 billion. Missing an IMF payment would put Greece in a club that includes Zimbabwe, Somalia and Sudan, countries that hold the dubious distinction of having fallen into arrears with the fund.
At the same time, a missed payment to an official creditor wouldn’t constitute a trigger to lower Greece’s rating to selective default under S&P’s criteria, the rating agency said Wednesday as it cut Greece’s rating to CCC+.