The Wall Street Journal: Greece set to default on IMF loan despite new push for bailout

Greece was set to become the first advanced economy to default on loans from the International Monetary Fund on Tuesday, after European finance chiefs shut down Athens’s last-minute request for emergency financial aid.

The Greek government said it submitted a proposal for a two-year rescue program from the eurozone bailout fund to cover its financing needs and restructure its debt. According to the proposal, Greece wants the new rescue package to help pay for 29.15 billion euros ($32.52 billion) in debt repayments between 2015 and 2017.

The proposal, signed by Prime Minister Alexis Tsipras, also asked for an extension of the existing €245 billion rescue program. But that extension and the demands for debt restructuring were quickly rejected by eurozone finance ministers during a conference call Tuesday evening, Finland’s finance chief Alexander Stubb said in messages from his official Twitter account.

Ministers, though, will consider the request for a new bailout through their “normal procedures,“ Stubb added.

In a first step in those procedures, Greek Finance Minister Yanis Varoufakis told his colleagues that he was submitting new plans for policy overhauls and budget cuts to the three institutions overseeing its bailouts, two European officials said. Those proposals will be considered by finance ministers during another conference call Wednesday morning, the officials said.

There are big questions marks hanging over Athens’s request for new aid. It would require Mr. Tsipras to make a major about-face and accept the pension cuts and sales-tax increases lenders want—and which he rejected last week. It was unclear how much ground Tsipras was conceding in the latest proposal.

”The political stance of the Greek government doesn’t appear to have changed,” Jeroen Dijsselbloem, the Dutch finance minister who presides over the talks with his eurozone counterparts, said after the teleconference. He added that Greece’s request for a third rescue program wouldn’t be considered until after the country’s referendum on the measures attached to the aid, which is planned for Sunday.

The eurozone portion of Greece’s €245 billion rescue deal runs out at midnight, which is also the last moment Athens would be able to make a €1.55 billion payment to the IMF without falling into arrears. Once that payment is missed, Greece will join a short list of countries that has defaulted to the IMF, including Afghanistan while it was ruled by the Taliban and Haiti. Zimbabwe, led by strongman Robert Mugabe, was the IMF’s last major defaulter in 2001.

Greece said Tuesday that it had sent a request to the IMF for a delay in payment, though the fund has said Greece would immediately stand in arrears if it fails to make the payment on time.

Read an expanded version of this story at WSJ.com.

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