Greek payment delay? IMF rules allow it

(WASHINGTON) - On the verge of defaulting on debts to the International Monetary Fund Tuesday, Greece has asked for a delay, apparently based on a rarely used part of the Fund's charter.

Only twice before -- both times in 1992, and both times for much poorer countries, Nicaragua and Guyana -- has the delay been allowed.

But it gives the Fund the power to ease the pressure on troubled borrowers, much in the way the crisis lender was pressing Greece's European creditors to do instead.

The IMF charter says a borrower from the Fund can request to delay repayment to a maximum five years from the date of the loan. The Fund can decide it without consulting its members, according to Chapter V, Section 7 of the charter.

The delay can be even longer if the Fund's member states vote by a 70 percent majority of voting power in support. Such a move can be justified only if payment on the due date "would result in exceptional hardship for the member," the charter says.

The IMF has never made use of this clause which, in theory, would be open to Greece even if it would require support from most major and emerging economies. The United States holds 16.7 percent of voting power on the IMF board and the members of the European Union, together, around 30 percent.

With a 1.5 billion euro ($1.7 billion ) payment due the IMF by the end of Tuesday, Greece tried to coax its European Union lenders to extend its bailout program again to help finance its debt burden.

When that was turned back, the country asked the IMF for the delay, a senior Greek minister confirmed.