Greece says has honoured EUR 200m interest repayment to IMF

(ATHENS) - Greece made a 200 million euro ($225 million) interest payment to the International Monetary Fund Wednesday, the Greek finance ministry said, the first of two reimbursements Athens must honour by mid-May.

The smaller of the two scheduled payments totalling nearly one billion euros came despite the failure thus far by cash-strapped Greece and its European Union-IMF creditors to reach a deal to unblock 7.2 billion in bailout funds to Athens.

But fears that Greece might not scrape up enough cash to repay Wednesday's interest payment -- or the additional 750 million euros due May 12 -- were shrugged off by Greek officials.

"The instalment will be paid," assured Finance Minister Dimitris Mardas on TV station Mega an hour before Athens said it handed over the funds.

Sources in Athens have told AFP that the 750 million euros due next Tuesday will also be paid, and predict Greece will successfully raise 2.8 billion in two bond issues May 8 and 15.

Greece is planning a six-month Treasury bond issue for a maximum of 1.4 billion euros next Wednesday, following the stabilisation of rates that had soared in reaction to January's election of the militantly anti-austerity Syriza government.

Despite that, observers stressed that an accord between Greece and its creditors to release the blocked bailout funds remains crucial.

In order deal with its crippling liquidity problem, the Greek government has ordered public administrations and local authorities to transfer their reserves to the Bank of Greece awaiting a deal with creditors.

On Tuesday Athens blamed disagreements between the EU and the IMF for stalling the talks. It claimed that the creditors were divided over exactly what reforms should be required of the massively indebted country in return for the last tranche of rescue money.