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ATHENS – Desperate for cash, Greece’s new government is set to take 555 million euros out of a bank recapitalization fund.

The Radical Left SYRIZA-led coalition of Prime Minister Alexis Tsipras, which includes the Independent Greeks (ANEL) needs money to pay pensions and salaries at the same time it’s facing big payments to international lenders this month, including 1.5 billion euros to the International Monetary Fund (IMF).

With tax revenues falling as the administration is locked in tough talks with lenders over unfinished reforms, it’s looking everywhere for cash.

Government sources told Reuters the money will be taken out of Hellenic Financial Stability Fund (HFSF), the agency which rescued the country’s four biggest banks in 2012 during the heart of an ongoing economic crisis.

“This is money for which there is no other claim, it is available for the government,” a senior banker with direct knowledge of the matter told Reuters, declining to be named.

“The HFSF has discussed this with the European Stability Mechanism over the weekend and there is no issue,” the banker added, referring to the Eurozone rescue fund. He said it was up to the government to decide when it withdraws the cash.

The HFSF, funded from the country’s EU/IMF bailout with 50 billion euros, recapitalized lenders with European Financial Stability Facility (EFSF) bonds, which banks can still use as collateral for direct funding from the European Central Bank.

Greece has been also looking to tap into the cash reserves of pension funds and public sector entities through repo transactions to cover part of its funding needs in March.

In such transactions, pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials have told Reuters, although there’s no guarantee at this point it can be repaid.

 

Source: The National Herald
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