If cash-poor Greece fails to make any of its $1.7 billion in loan repayments to the International Monetary Fund this month, starting with $334 million due Friday, the country will be enshrined in history with a group of current and former deadbeats that includes Cuba, Zimbabwe and Sudan.
What sets Greece apart from many other cases is that it wasn't done in by war, revolution or violence - but rather its own debt and spending, compounded by a financial crisis and austerity measures imposed by the IMF and other creditors. (IMF Managing Director Christine Lagarde was meeting in Berlin Monday night with creditors including German Chancellor Angela Merkel and ECB President Mario Draghi to discuss reaching an accord over the Greek crisis, according to three people familiar with the gathering.)
Here are some of the highlights - er, lowlights - of nations that have missed IMF debt payments in the lender’s seven decades of existence, as recounted in large part in the 2001 book “Silent Revolution” by IMF historian James Boughton.
Sudan
Sudan has been overdue on IMF payments since 1984, when the country was reeling from calamities from civil war to a severe drought. It was about $1.4 billion in the hole to the fund as of April 30. The IMF declared Sudan ineligible for further funds in 1986, and external debt totaled about $45 billion, or 78 percent of GDP, at the end of 2013. “The unresolved arrears, combined with US sanctions since 1997, rule out access to most sources of external financing,” the fund said in a report last year.
Somalia
Somalia has been in and (briefly) out of arrears with the IMF since 1985, when it fell victim to a Saudi Arabia ban on cattle imports from East Africa as well as a slowdown in Middle Eastern economies that reduced the flow of remittances from Somali workers. The IMF in 2013 recognised the country’s new government headed by President Hassan Sheikh Mohamoud, paving the way to resume relations after 22 years. Somalia owed the IMF about $327 million as of April 30.
Zimbabwe
Zimbabwe’s case is more recent, with its overdue payments dating to 2001. The IMF that year blamed the nation’s economic crisis on “inappropriate macroeconomic policies and a general breakdown in the rule of law in the context of the government’s fast-track land reform program launched in early 2000.” That refers to President Robert Mugabe’s program in which land was seized from white commercial farmers, slashing export income from tobacco and other crops. Zimbabwe’s arrears amounted to $111 million as of April 30th.
Cuba
Cuba became a deadbeat after drawing down its gold tranche and $25 million in loans from the IMF in the final months of the Batista government in 1958. After Fidel Castro took power in 1959, the IMF postponed repayment until 1963, when it began procedures to make the nation ineligible for IMF money. Cuba withdrew from the lender in 1964 and Castro’s government repaid the loans over the rest of the decade.
Cambodia
Cambodia owed the IMF $15 million when Pol Pot and the Khmer Rouge took control of the nation in 1975. Amid the reign of terror in subsequent years, the IMF could communicate with the regime only through the country's United Nations ambassador, who told the fund that it wouldn't assume the previous government's obligations. In 1978, the IMF's board decided to impose penalty charges and restrict access to fund resources. Cambodia settled its arrears in 1993, after the first post- conflict elections were held.
Honduras
Honduras entered arrears in 1987 because of “several unrelated and coincidental developments,” Boughton wrote: a weaker market for coffee, one of the nation’s principal exports; a decline in foreign assistance, especially covert US support for Contra rebels based in the country who were trying to overthrow the Nicaraguan government; and the expiration of grace periods on many loans from official creditors in the 1980s. Honduras cleared its arrears in 1990 after the new government allowed the currency to depreciate.
Bloomberg
