Greece delay payments to IMF

Paresh Davdra is the Dealing Director of RationalFX, Currency Specialists. Tuesday 09th June 2015 16:31 EDT

Greece confirmed that they will not be making the €300million payment to the IMF as they have found a loop hole that allows them to bundle the whole of Junes four payments together as one €1.6Bn payment at the end of the month.  

“Under an executive board decision adopted in the late 1970s, country members can ask to bundle together multiple principal payments falling due in a calendar month. The decision was intended to address the administrative difficulty of making multiple payments in a short period,” he added.

Tsipras emerged from Wednesday night’s talks with European Commission president Jean-Claude Juncker and Eurogroup president Jeroen Dijsselbloem in a confident mood, insisting that an agreement would be found in the coming days. But the Syriza leader returned to Greece to discover outrage from sections of his ruling party over Brussels’ ongoing demands. His coalition government reassured the public that it will not accept “extreme proposals” laid out in the latest reform plans, while Tsipras spoke with German Chancellor Angela Merkel and French President Francois Hollande via conference call.

According to a Greek government official, Tsipras told Merkel and Hollande that the lenders’ proposal could not lead to a deal because it was not taking into account the progress made in Brussels. However, as this is becoming commonplace, the official insisted there was optimism that a deal could be reached soon.

The UK’s biggest business body (CBI) said that it believes the economy will grow healthily for the remainder of the year, after stalling in the first three months. To the surprise of most economists, the UK economy grew by just 0.3 per cent from January to March, its slowest rate since 2012. If it continued expanding at that rate, economic growth would barely surpass 1.2 per cent this year. Yet the Confederation of British Industry (CBI), which represents around 190,000 firms, believes this will be a blip.

It predicts the economy will bounce back to grow by 2.4 per cent this year. The rebound is expected to be immediate, with the business body anticipating 0.8 per cent growth in the economy from April to June. Despite growth prospects looking healthy at home, the CBI warned there are headwinds to the recovery, with a still sluggish Eurozone and renewed uncertainty over Greece’s economic future.

Consumer spending accelerated in May as shoppers splashed out on hotels, restaurants and bars. Spending climbed 2.6 per cent in May compared to the same month last year. The last three months have seen the strongest three-month average increase in expenditure since January 2008. Spending on hotels, restaurants and bars shot up 10.3 per cent on the year. Consumers also spent 3.9 per cent more on recreation and culture. High street spending was 3.2 per cent greater than it was in May 2014, the fastest gain for over a year.

The US jobs market produced a spring spurt to banish the winter weakness. Employers added 280,000 jobs in May, the most in five months, further dispelling fears that a first-quarter slowdown would take hold. Hourly earnings climbed from a year ago by the most since August 2013, while an increase in the number of people entering the US Jobs market caused the unemployment rate to creep up to 5.5 percent from 5.4 percent. The report bolstered the case for Federal Reserve policy makers to begin raising rates this year.

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