Greece buys time with council cash transfers
Published 22/04/2015 | 02:30
Greek officials expect an order that local governments transfer funds to the central bank will keep the country afloat until the end of May as European policy makers turn up the heat on Prime Minister Alexis Tsipras.
Local governments' cash reserves are estimated at about €1.5bn, according to a person familiar with the matter, who spoke on condition of anonymity. Officials in Athens ruled out also seizing pension funds and the cash reserves of state companies because there wasn't a need and the move would unnecessarily fuel anxiety, the person said.
With bailout talks stalled, access to cash is becoming increasingly critical. Resistance at the European Central Bank to further aiding the country's stricken lenders is growing and the ECB is studying measures to rein in emergency funding for Greek banks, people with knowledge of the discussions said.
"A bigger effort by the Greek side is needed so that we can close the topic in the interest of both sides," European Commission President Jean-Claude Juncker said in Vienna. "The intensity of the talks has increased in the past four to five days but not to the extent that they are ripe enough to come to a quick conclusion."
Tsipras may meet with German Chancellor Angela Merkel on the sidelines of a European Union summit in Brussels tomorrow, a Greek government official said yesterday.
Although a final accord is unlikely at a meeting of euro-area finance ministers in Latvia on Friday, another extraordinary meeting could be called at the end of April if needed.
"The sooner they come up with some kind of an agreement the better, but so far Europe has never missed the opportunity to miss an opportunity," Standard Chartered Bank Global Chief Economist Marios Maratheftis said in a Bloomberg TV interview.
Since Mr Tsipras assumed office in January, Greece has been using up its cash reserves to meet its obligations.
Greek lenders are mostly locked out of regular ECB cash tenders and instead have access to about €74bn of emergency liquidity assistance from their own central bank - an amount that has been reviewed weekly by the ECB.
The country is facing about €1bn in International Monetary Fund loan repayments in the first two weeks of May and while it hasn't drawn any funds from its bailout loan since August 2014, the government won't miss any of those payments, the source said.
The price of insuring €10m of Greek bonds against default for five years rose to $5.5m upfront plus €100,000 a year, signalling an 87pc probability of default.