Saturday 22 October 2016

Greece pleads cash running out, told to hasten reforms

Published 09/04/2015 | 12:24

Greek prime minister Alexis Tsipras shakes hands with Russian president Vladimir Putin in Moscow's Kremlin (AP)
Greek prime minister Alexis Tsipras shakes hands with Russian president Vladimir Putin in Moscow's Kremlin (AP)

Greece made another plea to the euro zone for cash to avert bankruptcy but was told to present an improved list of economic reforms within six working days for finance ministers to pave the way for any more lending, EU officials said on Thursday.

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Athens appealed for liquidity support at a meeting of deputy finance ministers in Brussels on Wednesday night but was told there must first be progress on the stalled list of measures to make public finances sustainable.

"From the Greek side there was a strong statement that liquidity is getting really bad and there was an appeal to release some type of liquidity support before the euro zone finance ministers' meeting on April 24," a euro zone aide said.

"But no one knows how this could be done -- there is no willingness to provide support before there is some progress in terms of the reform programme," the official said.

Greece told the same forum last week that it would have difficulty paying back an instalment to the IMF due on Thursday and covering its expenses for wages and pensions. But it subsequently said it would make the IMF payment on time.

Officials said euro zone experts were not convinced the liquidity position was a dire as portrayed by Athens, and some suspected an attempt to scare creditors into releasing funds.

Greece's creditors are determined to use their leverage to push through long delayed reforms that Prime Minister Alexis Tsipras' leftist government is resisting on social grounds.

"The mood was better than last time, but the substance was as murky as ever," another euro zone official said of Wednesday's talks.

There was a slight improvement in technical cooperation between Greece and the lenders, but little progress on the content of the reforms.

"We are still lacking detail on specific measures, especially in terms of their fiscal implication and time is getting very short -- decisions should be made on April 24 which is the next meeting of the Eurogroup in Riga," he said.

Once Athens agrees on a set of measures with its creditors -- euro zone governments and the International Monetary Fund -- and passes laws through parliament to implement them, it could get 7.2 billion euros that remain to be disbursed from its existing 240 billion euro international bailout.

But after 10 weeks in office the Tsipras government has been unable to agree with lenders, mainly because many of the measures run counter to his election promises to put an end to austerity and refuse "recessionary" measures.

As a result, Greece has not had any new funding from the euro zone or the IMF. Since it remains cut off from markets and the European Central Bank has rationed emergency funds for its banks, Athens says it is quickly running out of money.

If Greece and representatives of the creditors, now known as the Brussels Group, agree on a list of reforms by April 21-22 and ministers approve it when they meet in Riga, Athens might win some liquidity support from the ECB through an increased limit on short-term Treasury bill issuance.

Greece hopes a political deal could also help it receive 1.9 billion euros in profits that the ECB has made on purchases of Greek bonds in past years.

But for any new euro zone or IMF lending to occur, officials said Athens would first have to put the agreed reforms into law in parliament, because the government's credibility was now so low that no one would act just on its promises.



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