Greece may have failed to meet its IMF repayment, worth 1.55 bln euros on June 30, but this doesn’t mean that it will automatically be expelled from the Eurozone. Legally speaking, the Lisbon Treaty, which is the basis of the Eurozone, makes no provision for a member’s (official) expulsion. A 2009 legal analysis by the European Central Bank had found that it would be next to impossible for a member state to be expelled from the EU or the European Monetary Union.

Greece’s decision for a Zambia-styled bundling of four separate June payments helped avoid an immediate default and bought the radical leftists in Athens some time. The default that took place on the stroke of midnight on June 30 did not cause panic and chaos. as Greece could be given a 30-day grace period whereby it will be urged to pay back the money, despite the fact that the acrimonious breakdown of talks between Greece and creditors makes this difficult.

If Greece doesn’t manage to come up with funds even after a period of grace, then the arrears process may extend indefinitely as more debt starts piling up. In fact, Greece is due to pay another 6.6 bln euros to the European Central Bank over summer.

What happens now?

1. The IMF will send a note of debt to Greece concerning the delay of its payment.
2. No new lending to Greece.
3. The IMF will send a message to Greece stressing the gravity of failure to meet its obligations and calling for the immediate payment of arrears.
4. After a 30-day period of grace, Lagarde will have to notify the executive body of the IMF that Greece’s obligation is overdue.
5. Lagarde will need to inform Greece to pay its overdue debts while a complaint is issued by the IMF executive body.
6. After three months of delays, an announcement will be issued on the IMF page concerning the height of overdue arrears.
7. The fund can re-examine Greek access to Special Drawing Rights after a delay of six to 12 months.
8. After 15 months, technical help from the IMF could be postponed.
9. At 18 months, Greece could be ousted from the IMF and no longer have voting or representation rights.
10. At 24 months, measures for Greece’s exit from the IMF can begin.