Greece Effectively Defaults To IMF Using SDR Reserves To "Repay" Fund; 1 Month Countdown Begins

Tyler Durden's picture

When Monday’s Eurogroup meeting concluded without an agreement between Greece and its creditors, it should have been game over for Athens. With pensioners at their breaking point and with local governments reluctant to comply with a decree mandating a sweep of excess cash reserves, the idea that Greece would somehow be able to scrape together €750 million euros to make a scheduled payment to the IMF today seemed far-fetched at best which is why we asked the following question Monday afternoon:

Where, if not from local governments who have been extremely reluctant to comply with Athens' cash sweep decree, and if not from the IMF which will apparently not be paying itself tomorrow after all, is Greece going to get three quarters of a billion euros in the next 12 hours?

We now know the answer to that question. As Bloomberg reports, citing Kathimerini, Greece tapped IMF reserves to pay .. well, to pay the IMF:

Greece used up ~EU650m reserves from its SDR IMF holdings account to meet loan payment of ~EU750m due to Fund today, Kathimerini newspaper reports, without citing anyone.


Reserves kept in IMF holdings account need to be replenished within one month


IMF agreed over weekend for their use, given Greece’s liquidity situation; without use of those reserves, payment due today wouldn’t be possible.

Reuters has a bit more color:

Greece tapped emergency reserves in its holding account at the International Monetary Fund to make a crucial 750 million euro (539 million pounds) debt payment to the Fund on Monday, two government officials said on Tuesday.


With Athens close to running out of cash and a deal with its international creditors still elusive, there had been doubts whether the leftist-led government would pay the IMF or opt to save cash to pay salaries and pensions later this month.


Member countries of the IMF have two accounts at the fund - one where their annual quotas are deposited and a holding account which may be used for emergencies.


One official told Reuters that Athens used about 650 million euros from the holding account to make the payment.


"We made use of money in our holding account in the fund," the official said, declining to be named. "The government also used about 100 million of its cash reserves."

This explains why Yanis Varoufakis was so confident that the payment would be made and also why the language around the payment confirmation was so bizarre (recall that the heading was "Greece said to have given order for IMF repayment"). It also underscores the degree to which this entire ordeal has now careened into sheer absurdity because disbursing bailout funds that you know will immediately be sent right back where they came from in the form of an interest payment is one thing, but literally paying yourself is another, and the IMF seems to have done the latter on Monday. 

Given this, it’s certainly not surprising that Christine Lagarde and company are not thrilled about the prospect of participating further in what has become an outright farce and as El Mundo reports, the fund has now told the ECB and the European Commission that it does not wish to be a part of a new program for Greece.

Via El Mundo (Google translated):

The International Monetary Fund (IMF) has shown the Eurogroup their desire not to be part of a possible third bailout of Greece, which would amount to 50,000 million and would be vital for the survival of the Hellenic country. The absence of really emotional action by the executive with whom Tsipras contain spending and tackle the deficit, as well as the challenges it has done in recent weeks, as the readmission of public employees has caused the agency wants let all the weight of aid to Greece in the hands of the Eurozone and the ECB.


The fact that the IMF wants to stop being part of the bailout of a country is particularly serious, not in vain this institution is always the last resort of economies whose situation is more complicated. Therefore, the IMF has priority over other creditors in the order for recovery and, in all history, only Zimbabwe, Somalia and Sudan have failed to fulfill their obligations to it. However, given the difficulties to unlock a new rescue aid tranche that matures on June 30, the Washington-based organization fears that Greece will become the first economy in a developed nation it incurs a default, as They have confirmed to THE WORLD sources familiar with the process.

For Germany (where lawmakers are already pressuring Angela Merkel to cut the Greeks loose) this may be the final straw.


Greece is now reliant on a similarly ridiculous circular funding scheme to pay public sector employees whereby pensioners will only receive payments if the government is successful at tapping pension funds for cash.

Via Bloomberg:

Greece may be able to meet end-May salaries and pensions payments, if pension funds, municipalities commit more of their cash reserves.

And because all of the above isn't preposterous enough, Greece will depend on the disbursment of the €7.2 billion left in its current program (about half of which is set to come from the IMF) to replenish the funds it raided from its SDR holdings:

Greece assumes that an agreement will be reached by end-May for disbursement of bailout funds, so that it can replenish holdings account reserves.

In sum: the IMF paid itself on behalf of Greece and will now be forced to pay itself back for paying itself later this month. Or, put differently, Greece has prepaid the IMF with IMF money it doesnt have.

Meanwhile, Greek pensioners are set to adopt a similarly ridiculous self-payment scheme in a matter of weeks even if they don't entirely appreciate the sheer insanity that's taken hold in Athens. 

And just to prove how dire the situation now is, Market News just reported the following shocker:


The Greek endgame is now upon us.

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NoDebt's picture

But I can't be out of money, I still have checks!


junction's picture

Greece is nearly there, a cashless society, the goal of the Obama administration.  Peasants should not have cash.

new game's picture

so the mattress has 650m euro deeply hidden, what a fucking joke. next up suspended payment, like the check is in the mail. lol...

Aaaarghh's picture

o/t Outside our pharmacy there is a bus stop. The council recently decided to put speed bumps on the road. the bumps are now in place and preceding either side of the bump is about 20 yards of zig-zag markings to indicate hazard. Zig zag markings which now overlap said bus stop, requiring the repositioning of the bus shelter some 5 yards further away from the road bumps, wasting valuable tax-payer fiat. My point is, the world is run by the corrupt at EVERY level, starts at the top and works its way down. We need a reset, but we won't get one if tptb have a say.

SickDollar's picture



Haus-Targaryen's picture

So the IMF is paying itself?  

Operation Kick the Can is now complete until next month.  

VinceFostersGhost's picture



Vote for me, and you can retire at 45.


Living the dream, we'll just get the Germans to pay for it.

Stackers's picture

Desperate people do desperate things

knukles's picture

Kudos, Tyler.
Most excellent job of reporting .... calling it right on the mark ... as always
Keep up the beautiful invaluable work.
                      Thank you

Killer the Buzzard's picture

Let's start a Kickstarter to send Mr. Panos to Brussels and give them a talking to.

Oh regional Indian's picture

Perhaps this is THE perfect example if a circle-jerk AND a circle of Jerks...

Keyser's picture

The fat lady is warming up in the wings and the derivatives chain is rattling in the closet... It's going to be an interesting summer...

Wolferl's picture

Throw those pathetic Greek GFs out of Europe. Do it already, they are just worthless parasites since decades.

Fish Gone Bad's picture

Grown adults making shit up. 

DutchR's picture

So Santa is not real.........


Paper value

Darkman17's picture

And by retire, we mean that you can stop working at your uncles ice cream shop for 15 hrs a week during summer season.

max2205's picture

And who funds the guessed it. ..

new game's picture

next act, ecb buying imf bonds created to bail the bailer. all good, this game will never end.

think the word is hypothicated, like eating puke twice...

agroulx's picture

Or Greece issuing bonds so they can pay the IMF, and then issuing more bonds so they can pay those who purchased their intitial bonds....

Kirk2NCC1701's picture

Is that you, Janet?  

Don't forget, copying is the sincerest form of flattery.  LOL.

agroulx's picture

I never thought I'd be recognizable under this paper bag

Augustus's picture

Puutie has his own cash problems with the imploding Russian economy.  He is on the same cash hunt that ViralFukus is on.  Must be a big cash drain sending support to keep the Crimean people happy with becomming serfs again.


Putin’s Next Takeover Target Is Oil Giant's $34 Billion Cash Pile

Michigander's picture

Exactly! We finally got our road completely ground and resurfaced after 15 years of extreme potholes. 2 months after the raod was done they ripped up 30 feet to put in a new culvert and then patched the road. You couldnt think far enough ahead to put in the culvert first?

StychoKiller's picture

In all likelihood, the highway/roads dept doesn't know the water/sewer dept's schedule.

Transformer's picture

Or they do know each other's schedule.  Years ago in Fargo, those two departments were at war with each other, and the water/sewage dept would promptly show up to tear up new roads.  That is... until one day when a bunch of citizens with guns showed up at the same time and put a stop to the madness.

hibou-Owl's picture

I live in France, an awesome medical system. I went to the pharmacy for my wife script, no charge.
But tomorrow night there's a council meeting regarding inspecting everyone's septic system., to ensure sanitation levels.
I should stand up and say that I take my daily dump in the paddock because it adds nutrients to the soil.

Just another layer of dumb fucks thinking they are important.

willwork4food's picture

You must live in Chicago. That kind of shit happened ALL the time when I was there. Fucking crooks.

dizzyfingers's picture

Sounds like union job programs here, every street torn up all the time, then fixed, then torn up again... and so on.

COSMOS's picture

I dont understand the mentality of stripping your accounts bare before they default.  It will make it just that much more painful.  Had they defaulted a year or two ago they would of had cash reserves to pay pensions etc and ease the transition back to the drachma.  FOOLS and CROOKS.

Time for some pitchforks to take to the streets and skewer some of these traitors.

new game's picture

thinking the same. if i was fucked and new it, id be stashing cash and planning the midnight move well in advance. it's called self preservation. are the greeks that fucking stupid OR all part of the plan. strip minning of a country, by the tptb, beholden by slimmy banksters...

NoDebt's picture

That's exactly why the pensioners and municipal governments don't want to send their money to the Greek central bank.  They know it's going to be needed later.

Luckhasit's picture

The whole idea NoDebt is to drain Greece completly dry (banks, personal savings, everything) making their monthly payments, then have them default.  So, when they are forced out of the EU, well they won't have any kind of bargaining power.  I can see Greece getting sliced up creditors.  

Or in steps Russia, China, Iran whoever wants to give the EU the middle finger.

PhilB's picture

So maybe this is just a show. If Syriza was serious about leaving then they would never allow the Banks to be drained of tens of Billions of Euros since January, they would not be paying loans back all this while, would not be depleting all sources of funds and paying pensions in Euros. Maybe, where are the conspiracy guys when you need them, maybe this is a way to make sure the population has no choice but to stay the course and allow a back down from the situation while showing Syriza went to the last dollar, err Euro, to try and change course, and when it is least favorable to actually change course, was forced to stay the course. 

This all seems like a show, a poorly devised Greek drama, for the populations of Greece and Europe with no real intention to do anything else but reach a deal and save face for both sides.

Motasaurus's picture

I tried to avoid this. I didn't want to be involved in your world any longer. I was honestly fed up with you people and your rotting rubbish heap of a world.

So I haven't involved myself in this little farce of yours since the incident occured. Even though I know everything.

In a word, I was exhausted from my fruitless exertions, unfortunately.

But I've changed my mind because, well, this show you put on today is pitiful. a farce should be funny, but this one hasn't made me laugh even once.

Motasaurus's picture


Such little love for Shirow Masamune on here.  

Morbid's picture

i tend to believe that this new greek government is just part of the project. otherwise noone would allow them to take the steering wheel. eu threw a bone towards greek public to buy some time. unless people revolt they would continue their descent.

XAU XAG's picture

Those reserves would have been FROZEN to pay any debt 


Personally I would pulled the funds purchased gold then default and issue new currency

QQQBall's picture

Pulled the funds - woudl never have been allowed. Idjit

post turtle saver's picture

I agree completely... that which can't be paid back, won't be paid back... so, why pretend... defaulting was the best path for Greece... they should have shipped in some consultants from Iceland to kick off the process four years ago... instead we see this constant daily drama and pathetic mewling over spilt milk that will never ever find its way back into the bottle...

Greece should never have been admitted to the EU, ultimately... terrible mistake

Ghordius's picture

welcome in the Age Of Pretensions. who does not pretend and extend... has to pay. now

Ghordius's picture

it's not the membership in the EU that is an issue. nor that in NATO. nor that in OSCE. nor that to the UN. nor that to any other club of sovereign except the EuroSystem, i.e. the ECB (19 members)

if you are not keeping track of what club is what... I have bad news for you. the future might look more complicated. see AIIB, where some countries will be members of both IMF and AIIB, and some only of one, and some of none

multipolarity will mean more competing and cooperating clubs of sovereigns

Ghordius's picture

cosmos, if you ever had a running business with let's say three or more co-owners you might understand this "mentality" better, I'd say

in the case of the Hellenic Republic, it's... democracy. this current Greek government has not received a mandate or permission to default as such, from Parliament, nor was that in any way on the syriza electoral platform as point

the IMF is, for good or bad, a kind of bank for sovereigns, and their lender of last resort

as in the case of a bank, you might have a loan from them and at the same time a checking account, and perhaps even a portfolio with stocks of that bank. Greece has "stocks" of the IMF, as all members, and also this "emergency account" from which it can draw, though, as in the case of a bank vs. private party, different conditions depending from the account

in all this, note one thing: Greece's gov does not want to leave the IMF... while Putin's Russia has offered a place in the new brics' AIIB, the new competition to the IFM, the "anti-IMF"

meanwhile, Germany is insisting on the IMF's involvement as a kind of "hey, if you want to play geopolitics on this, then take out your wallet, too"

all this talk about "why have they not defaulted a year or two ago" is neither here nor there. one or two years ago there was a different government that did a lot of hurtful adjustments steering towards balanced budgets - which is the "golden standard" the other eurozone countries agreed on as "what it takes" in order to get help. a government based on parties that are now at the opposition, in parliament

and even if the Tsipras Cabinet sucks the IMF accounts dry to then leave for AIIB... well, a Chinese-led "anti-IMF" will nevertheless not subscribe to the full neo-keynesian dogma of some western countries. even the IMF never really subscribed to that. so somehow balancing that budget would return to be an issue

which is the problem with unbridled neo-keynesianism in general, sovereign or private: spending does help. throwing money at problems... works. until you are in financial problems, that is

"the markets" aren't lending to Greece anymore. balancing that budget would make Greece creditworthy again... despite a leftist government, for all, be them markets or other sovereigns or sov-banks like the IMF or soon the AIIB

please spare me, though, this tired talk about pitchforks. it sounds so... impotent and "keyboard-warrior"-like. no revolution has ever happened because bystanders cheered for it

NoDebt's picture

"this current Greek government has not received a mandate or permission to default as such, from Parliament, nor was that in any way on the syriza electoral platform as point"

Guaranteed, when the defaut happens it won't be voted on.  If you were in their parliament would you want to publicly be seen for voting to default?  Or, for that matter, for voting NOT to default?  No way.  And that's just one, minor, reason why there won't be a vote.

Ghordius's picture

excellent point, but there is a little "tradition", if you want, that any government not doing what it's parliament wants can be indicted with criminal charges, besides being thrown out

sure, if Parliament is looking away on purpose... it might help. but I would not want to be a minister in a cabinet that has to notify parliament "sorry, we grounded the ship of state". charges of treasonous misneglect or similar things come to mind. it's a high-stakes "game"

NoDebt's picture

Surely, at this late date, you can't believe that the elites would let themselves be put in jail.

Ghordius's picture

I could point out that revolutions are often based on elites saying: you won't put me to court because of that. One of the best examples for that would be Caesar crossing the Rubicon

interestingly, one of the charges he feared most was that one from Cato Minor: of going against the Jus Gentium, when he accepted the surrender of an army and butchered it afterwards

(the equivalent of it would have been Bush The Younger landing on that aircraft carrier, claiming "Mission Accomplished"... while fretting about a Senate asking him very pointed questions about WMDs, reasons for war and torture)

GMadScientist's picture

Caesar paid for his mistakes. Bush: not so much, yet.

Grumbleduke's picture

I know, you won't approve, but I'll say it anyway:


Fuck all of you, pretending there's no difference between currency, money - and trust.

Ghordius's picture

do I pretend there is no difference between currency, "hard" money (i.e. based on commodities, for example gold or silver) or debt, or... trust?

have a look everytime a country had similar problems while owing gold. Baron Rothschild used to call in the British Navy gunboats for collection