Historically, there have been several cases of late payment to the IMF, with a peak at the end of the 1980s. Currently, only two countries1 are in situations of arrears to the IMF. The IMF’s strategy with respect to unpaid debt is based on three pillars: 1/ A preventive aspect, which involves carrying out a detailed assessment of the countries’ situation prior to any commitment to a financial assistance programme, with regular monitoring throughout the programme;
2/ A phase of cooperation, with a range of incentives and support measures in the event that arrears appear, aimed at re-establishing a normal situation as fast as possible; 3/ A phase of corrective measures, to manage obvious cases of non-cooperation (Table 1). So before arriving at sanctions, a country that defaulted on a payment could – if it wanted to do so – normalise its situation with the IMF and benefit from a support programme (Staff-Monitored Program). This would be an informal programme (but which must be approved by the IMF Board of Directors) which offers flexible tools for dialogue between a government and IMF management on the country’s economic policy.
What would happen with Greece? Greece’s upcoming payments to the IMF are scheduled for 5 June (EUR 300 million), 12 June (EUR 336 million), 16 June (EUR 560 million) and 19 June (EUR 336 million). In the event of a payment incident from 5 June onwards, the IMF’s Managing Director would notify the Board of Directors of the existence of an outstanding payment only after one month. A review of the complaint that would follow in the event the outstanding amount remains unpaid, leading to the first corrective measures, i.e. a limit to access to IMF resources and a ban on the use of SDR by the country, would take place only three months after the date of the initial nonpayment.
The country in question can at any time rectify its situation, either by paying the arrears, or by signing up for a cooperation programme. The procedure of settling outstanding payments is therefore quite flexible and relatively gradual, with increasingly severe corrective measures, but which could also become less severe according to the country’s efforts to meet its commitments. 1 Somalia and Sudan for a total amount of SDR 1.2 billion (around EUR 1.5 billion) A Greek payment incident with respect to the IMF from 5 June onwards would not mean that the country would be in default, something the rating agencies also agree to. This timetable still leaves a bit of time for Greece and the international institutions (EU, ECB and IMF) to reach an agreement before the large repayments to the ECB due in July and August.
