Greece: IMF says payment delays no help to nations in crisis

The IMF does not extend payment terms as a matter of longstanding policy, said the global lender

The International Monetary Fund said today that allowing a borrower to delay repayment, as Greece has requested, is generally ineffective in helping a country overcome crisis.

"The IMF does not extend payment terms as a matter of longstanding policy," the global crisis lender said in a statement.

Read more from our special coverage on "GREECE CRISIS"

• Moody's cuts Greece rating deeper into junk territory
• Greek PM tells voters rejecting austerity will yield better deal
• Greece crisis: Possible scenarios and the opportunity
• Greece deal possible before July 20 bonds payment: euro zone official
• Greece seeks new EU loans after IMF debt default

"More than 30 years ago, the IMF granted a few low-income countries delays at their request, but in each case the delay proved not to help with immediate financing needs or fundamental economic problems."

Greece asked for an extension on its 1.5 billion euro ($1.7 billion) IMF debt payment yesterday just hours before it was due. Greece failed to make the payment, becoming the first advanced economy to default on a loan to the 188-nation institution.

The IMF executive board, which did not rule on the Greek government's request, will review it "in the coming weeks," a person close to the matter told AFP today.

A ruling in favor of the request would mean the country would not be officially judged "in arrears" on its loan, the IMF's terminology for default. Being in arrears makes a country ineligible to draw on IMF financing.

Meanwhile, Greece faces a payment of 455 million euros due to the institution on July 13, and another 284 million euros on August 1.

In its statement today, the IMF emphasized that Greece's problems would be best addressed through a "balanced approach" combining Greece's steps to reform its economy and the country's European partners providing additional financing and debt relief.

"The IMF's priority remains helping the Greek people through this difficult period of economic turmoil," it said.