Europe Will Greece make its IMF payment?

Whether Greece makes its €1.5 billion payment to the IMF that is due next Tuesday, June 30th, is a key risk to global markets. 

Greece could defer payments due to the IMF earlier in the month under a special provision to bullet them together by month-end, but failure to meet its payment this time would be a serious escalation. 

The IMF's practice is not to record late payments as defaults because of its preferred creditor status, but being late would likely prompt a stern rebuke from the IMF and it would make Greece ineligible for further funds from the IMF in any successful agreement with its creditors until the IMF is made whole. 

It's also an uncustomary experience at the IMF partly due to its preferred status and as documented in this excellent Bank of Canada database of global defaults1 and in chart 1 replicated from the study. Countries that have defaulted on IMF payments offer dubious potential company, Cuba; several African countries including Zimbabwe, Sudan, and Somalia; plus Cambodia and Honduras.

It has been noted that these economies defaulted upon experiencing wars or revolutions. Default by Greece would likely heat up emotional rhetoric and intensify concerns about an exit from the Eurozone. 

To avoid this, requires that a funding for reforms agreement be in place and approved by the Greek parliament in time and then approved by other Eurozone parliaments. While Greece could muster the cash to meet the payment, if an agreement is not approved and in place then its willingness to meet its obligations would clearly be tainted, says Scotia Bank.