Financially-Troubled Greece Meets IMF Deadline

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After weeks of mixed signals about its intentions, today Greece paid off part of a loan it owes to the International Monetary Fund. The $485 million payment came as a big relief to the financial markets, which have been worried that Athens might default on its debts. But Greece has more loans coming due later this month, and its funds are growing tight. NPR's Jim Zarroli has more.

JIM ZARROLI, BYLINE: Greece's left-wing government came to power in January promising to take a much tougher stance with the country's creditors, who've imposed punishing austerity measures on the country. The government's rhetoric set it up on a collision course with the major Eurozone powers, but today the Athens government blinked and a crisis was at least temporarily averted. MIT's Simon Johnson is the IMF's former chief economist.

SIMON JOHNSON: The fact they made the payment means that the discussions continue with the European Union, and all the options are still on the table. But the situation is very delicate and quite difficult.

ZARROLI: Over the next few weeks, Greece faces deadlines on bonds it issued and also is supposed to make another large payment to the IMF. But it's not clear Athens has the funds to do so. And to borrow in the private markets, Greece would have to pay exceptionally high interest rates. In recent weeks, Greek officials have been sitting down with European finance ministers in an effort to revise the payment terms. Today, IMF head Christine Lagarde said the talks should continue.

CHRISTINE LAGARDE: It's a difficult path, but it's one that has to be walked and which will just improve the situation.

ZARROLI: But Greece's creditors want tougher cuts in public sector wages and benefits, as well as tax increases. And Prime Minister Alexis Tsipras says the country has already suffered enough. This week, Tsipras raised eyebrows across Europe with a trip to Moscow. Saddled with its own economic problems, Russia probably can't help Greece much financially, but European Union officials are contemplating further sanctions against Moscow because of its annexation of Crimea. And Russia is eager to strengthen its friendship with Greece.

Eswar Prasad is a senior fellow at the Brookings Institution.

ESWAR PRASAD: The Eurozone is required to act by consensus on such measures. And if Greece withheld support from those measures, it would give Russia a little more breathing room, a little more leverage in dealing with the Eurozone.

ZARROLI: Still, Greece has a weak hand to play in Europe. Two years ago, European officials were terrified that a default by Greece could reverberate throughout the financial system. Today, Europe's economy is still anemic, but the banking system is stronger, and smaller countries like Ireland and Portugal are in better shape. European officials want to make sure Greece pays its debts in the coming months, even as they realize that a default wouldn't be the kind of systemic threat it once was. Jim Zarroli, NPR News. Transcript provided by NPR, Copyright NPR.