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Christine Lagarde : No period of grace for Greece debt payment

The International Monetary Fund (IMF) chief Christine Lagarde has ruled out the possibility of any extension of an end-of-month deadline for Greece’s debt repayment.

“There will be no period of grace…I have a term of June 30 — if it’s not paid by July 1, it’s not paid,” Lagarde told reporters in Luxembourg where eurozone finance ministers were meeting on Thursday.

She said Athens will be in default with the IMF at the start of July if it fails to make a 1.6-billion-euro debt payment.

Greece has already experienced the grace period as the June 30 payment is in fact a merger of four IMF payments. Only Zambia had used such a formula before in the 1980s.

Lagarde’s comments ratchet up the pressure on Greece’s leftist government, which has failed to persuade international creditors to unblock the last seven -billion-euro tranche of Athens’ bailout.

Greece says it cannot save money for the debt payment by reducing its pensions, an issue described by the ruling Syriza Party as a red line. The IMF chief, however, said, the body is fully prepared to discuss the country’s pension system to find a way out of the standoff.

Experts speculate that if Greece defaults on its debt, it will exit the European Union, making it the first country to do so since the 28-nation bloc was founded in 1993. Greece’s potential exit would then set a bad precedent for other cash-strapped countries within the union.