May Day holiday provides Greece with 3-day respite to repay IMF

Greece’s cash-strapped government may get a brief respite in yet another looming debt payment next week thanks to a public holiday.

As Prime Minister Alexis Tsipras’s government struggles to pay pensions and salaries at the end of the month, the May 1st public holiday may give its depleted coffers a break.

Greece needs to repay about 201 million euros ($217 million) in interest due on its International Monetary Fund loans by then, according to the IMF’s website. As the deadline coincides with a holiday, followed by a weekend, the payment can be delayed until May 6, a person familiar with the matter said.

The Fund will only send the payment notification on May 4, and Greece will have two days to make the payment, the person said. The deadline for a principal repayment of about 766 million euros, which is due May 12, won’t change, the person said, asking not to be named, as he was not authorized to speak publicly on the matter.

Interest on IMF loans is calculated and paid quarterly, using the three-month periods corresponding to the IMF fiscal year of May 1 to April 30. A Greek official with direct knowledge of the matter confirmed that the payment is due May 6, saying that interest charges on IMF loans are being paid 4 working days after the end of the month charged. May starts with three non-working days.

Greece has lost access to capital markets and relies on emergency loans from the IMF and the euro area to stay afloat. As a review of its compliance with bailout terms remains stalled for the eighth consecutive month, the country is running out of time and money. Its liquidity position is so tight, that a missed payment on its international obligations may be a matter of weeks, according to economists surveyed by Bloomberg.

Internal obligations, including payments to civil servants and retirees, are also becoming increasingly difficult. Greek deputy Finance Minister Dimitris Mardas said Wednesday that the country’s coffers are about 400 million euros short of the amount needed for meeting salaries and pension obligations. The finance ministry has so far secured 160 million euros from local authorities, hospitals, universities and municipalities, after the government ordered them to hand over cash reserves to Bank of Greece, Mardas said today.

The move can buy the government up to six weeks of liquidity, a person familiar with the matter said earlier this week, while negotiations with creditors continue.