Greece postpones IMF payment; snap elections possible

Greece delayed repayment of an International Monetary Fund (IMF) loan on Friday and a deputy minister said the government might call snap elections if the country's creditors do not soften their terms.

Raising the stakes in its acrimonious negotiations with international creditors, Greece has decided to postpone payment of the $338 million loan — a highly unusual step, but one that does not yet signal a formal default.

The surprise decision was made Thursday, just hours after Prime Minister Alexis Tsipras was presented with a tough compromise deal from lenders that crossed many of his “red lines,” including tax hikes, privatizations and pension reform.

The offer was aimed at staving off imminent bankruptcy, but it triggered fury in Greece's ruling Syriza party. Early elections would be a way to seek public legitimacy for the difficult decisions needed to secure more cash.

Greece's bailout expires at the end of June and if no cash-for-reforms deal is done by then, default would seem certain, shunting the eurozone into uncharted waters and opening the way for Greece to exit the single currency.

The Athens stock market fell 3.2 percent in early trade on Friday, while yields on Greek and lower-rated eurozone bonds headed higher in a sign of growing investor unease.

Tsipras, elected in January on a promise to end years of grinding austerity, is due to brief parliament on Friday, with his party showing little willingness to back down.

“The lenders want to impose hard measures. If they do not back down from this package of blackmail, the government ... will have to seek alternative solutions, elections,” Deputy Social Security Minister Dimitris Stratoulis, a hardliner in the government, told Antenna TV.

Greek Economy Minister George Stathakis said the latest deal, drawn up earlier this week by top level officials, including German Chancellor Angela Merkel, was unacceptable, but stressed that his country did not want to leave the eurozone.

“Our government has a mandate to remain in the euro and get a better deal to ... try to change the terms of the agreement that we have with European partners,” he told BBC radio. “Greece has to remain within the euro.”

An opinion poll published on Friday on the website Newsit showed that three out of four Greeks wanted to stay in the 19-nation eurozone, while almost one in two was in favor of the government reaching a compromise deal.

Some 37 percent of people questioned in the Alco survey supported early elections to resolve the standoff.

“It is more likely that there will be elections than not,” Costas Panagopoulos, head of ALCO pollster, told Greek radio.

Reuters