DESPERATE: Greece Taps IMF Reserves to Pay €750m Debt

Greece took the unusual step of raiding its holdings of the International Monetary Fund’s de facto currency to make a €750m payment to the fund on Tuesday, in another sign of the country’s increasingly desperate cash crunch, reports FT.

The €750m payment to the IMF on Tuesday was the biggest Athens has made to the fund so far this year. But it is just the first in a series of major payments to the IMF and the European Central Bank due in the coming months that have raised the spectre of a Greek default and exit from the eurozone.

Asked whether Greece’s decision to tap its IMF funds was a cause for alarm, Valdis Dombrovskis, the European Commission vice-president in charge of eurozone policy, said: “It’s for the experts to look into the issue before I can comment.”

Like every IMF member, Greece is allocated a stock of the IMF’s own notional currency — known as Special Drawing Rights — but they are rarely tapped. Greece’s allocation of SDRs is normally worth about €985m, but the account stood at €700m at the end of March, the most recent data publicly available.

Although IMF members are allowed to use the account at their own discretion, it is highly unusual to use the funds to repay the IMF itself.

 -RW