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BAD COMPANY

Greece has joined Somalia, Sudan, and Zimbabwe in defaulting on the IMF

A Greek national flag flutters atop the university building as dark clouds fill the sky in Athens, Greece, June 30, 2015.
Reuters/Yannis Behrakis
Dark days ahead.
By Jason Karaian
Published Last updated This article is more than 2 years old.

It’s official: Greece has defaulted on a $1.7 billion loan repayment to the IMF, earning it the dubious honor of being the first advanced country to stiff the international financial institution, and setting a new record for the size of a missed payment. (Step aside, Sudan.)

At a stroke, the IMF’s “overdue financial obligations” have nearly doubled:

Greece now joins Somalia, Sudan, and Zimbabwe in falling into arrears with the IMF. The IMF’s procedures for dealing with late payers are not the same as a private lender’s, though. The fund will now enact a somewhat convoluted procedure (pdf, p. 139) that features warnings, declarations, meetings of the board, and much else besides.

Credit-ratings firms do not consider a missed payment to the IMF as a bona fide default, and Greece’s other lenders—namely, the rest of the euro zone—are unlikely to call in their loans (as they are now allowed to do) and trigger the immediate bankruptcy of the country. But Greece’s current bailout deal with fellow euro zone states has just expired, taking billions of much-needed euros in potential aid with it. Now, it will need to agree to a completely new deal to unlock further funds.

The IMF’s rules require that it limit contact with Greece as long as the country is in arrears. The fund says a last-minute request from the country—does Athens ever do anything on time?—to extend the payment deadline will be considered “in due course.”

In the meantime, the IMF will hope that Athens and its other creditors can work out their differences. Greece still owes the fund around $26 billion in total, with loan repayments scheduled to come due from next month out until 2030. If Greece can’t get its repayment schedule back on track, that would make the IMF’s difficulties during the 1980s, when at its peak 26 countries were in default and arrears rose above $5 billion at current exchange rates, pale in comparison to the potential damage that just one nation could do to the balance sheet now.

History of IMF defaults

Cuba
1959–1964
Egypt
1966–1968
Cambodia
Mar. 1975–Oct. 1992
Nicaragua
Feb. 1983–Apr. 1985
Guyana
Apr. 1983–Jun. 1990
Chad
Jan. 1984–Nov. 1994
Vietnam
Feb. 1984–Oct. 1993
Sierra Leone
Nov. 1984–Sep. 1986
Sudan
Dec. 1984–present
Liberia
Dec. 1984–Mar. 2008
Tanzania
Mar. 1985–Jul. 1986
Zambia
Apr. 1985–Jan. 1986
The Gambia
Jun. 1985–Jul. 1986
Peru
Sep. 1985–Mar. 1993
Jamaica
Apr. 1986–Jan. 1987
Zambia
Apr. 1986–Dec. 1995
Sierra Leone
Jan. 1987–Mar. 1994
Somalia
Jul. 1987–present
Honduras
Oct. 1987–Nov. 1988
Panama
Dec. 1987–Feb. 1992
Democratic Republic of the Congo
Jun. 1988–May. 1989
Haiti
Oct. 1988–Sep. 1989
Honduras
Nov. 1988–Jun. 1990
Iraq
May. 1990–Sep. 2004
Dominican Republic
Aug. 1990–Apr. 1991
Democratic Republic of the Congo
Nov. 1990–Jun. 2002
Haiti
Nov. 1991–Dec. 1994
Bosnia and Herzegovina
Sep. 1992–Dec. 1995
Yugoslavia
Sep. 1992–Dec. 2000
Central African Republic
Jun. 1993–Mar. 1994
Afghanistan
Nov. 1995–Feb. 2003
Zimbabwe
Feb. 2001–present
Greece
Jul. 2015–present

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