Greece made payment to IMF on time but cash shortage remains

The Managing Director of the International Monetary Fund(IMF), Christine Lagarde, has confirmed that the Greek government made a 459 million euro payment due on April 9.

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Lagarde was confirming a statement by a source in the Greek finance ministry that the payment had been ordered. The crucial payment will help Greece move closer to receiving more funds from an extended bailout loan that will help Greece stay in the euro zone. The Greek government had threatened not to make the payment on time if it would not be able to pay pensions and a government payroll a few days later. Greece will still need to make interest payments of 400 million euros and roll over 2.4 billion euros in short-term treasury bills on April 14 and 17. Even yesterday, Greece issued 1.14 billion euros in six month term treasury bills. The Greek unemployment rate declined marginally in January to 25.7 percent in January versus 25.9 percent the previous month. After a long recession, the Greek economy grew 0.7 percent last year.

In his recent meeting with Russian president Vladimir Putin, Greek Prime Minister Alexis Tsipras did not request any economic aid. Putin suggested Russia might provide credits for large scale joint projects in the future. He said:"The Greek side has not addressed us with any requests for aid, We discussed cooperation in various sectors of the economy, including the possibility of developing major energy projects."

The recent list of reforms presented by the Greek government to its creditors is not regarded as enough by Greece's creditors. Euro zone deputy finance ministers have given Greece six working days to come up with revised reform proposals in order to allow a deal to be reached on April 24 at a Eurogroup meeting in Riga, Latvia. The earlier reform list was regarded as too optimistic about revenue projection and did not deal adequately with pensions and labor market reform. On these latter issues the Eurogroup demands are at odds with the promises of Syriza during their election campaign.

While the IMF payment may provide a short term sense of relief, Greece's top banks including the National Bank of Greece are bracing for a continuing battle as more payments become due. Reports indicate that a default and Grexit or exit from the euro zone, could create even more hardships for the Greeks and problems for the Greek economy. Even if Greece does get the remainder of the funds in this bailout extension after the meeting on April 24, within two months it will need more funds to cover its debt. The Greek government says it does not want another bailout but it is not clear how this can be avoided.