Greece is so short of cash to pay workers and pensioners it’s doing everything – so far – but seizing bank accounts to get money, world press reports show.
Greece Tells Embassies, Consulates to Turn Over Cash
The Guardian – Nick Fletcher
Greece avoided another financial crisis by paying about €500m-worth of wages to public sector workers, but suffered another downgrade of its credit rating.
“The mid-May payments of wages and pensions … were made within the scheduled timeframe,” the finance ministry said. They had been due on Friday.
The payment came as Greece remained locked in talks with its creditors in an effort to release €7.2bn of bailout funds to avoid a default and exit from the eurozone.
In a sign the leftist Syriza government was preparing to compromise over some of the reforms demanded by Brussels and the International Monetary Fund, it said it would push ahead with privatisation of its biggest port, Piraeus. It is in talks with China’s Cosco, which manages two container piers at the port, about selling a majority stake.
“We are in very advanced talks to expand this cooperation very soon in relation with the inclusion of a railway network as well,” the defence minister, Panos Kammenos, told an economic conference in Athens.
Earlier in the week, Greece paid $750m due to the IMF, albeit by using a reserve account held at the IMF itself, while the European Central Bank raised the level of emergency funding for Greek banks by €1.1bn to €80bn.
Athens has also called for its embassies and consulates to forward any cash reserves in an effort to avoid running out of funds before a deal with creditors is reached. But it ran into a setback when the parliamentary speaker refused to transfer Hellenic parliament cash to the state.
Meanwhile, DBRS ratings agency downgraded Greece further into junk status, cutting it from B to CCC with a negative outlook.
“The current downgrade is due to a further increase in uncertainty over whether Greece and its creditors will reach an agreement on a programme that restores macroeconomic stability and improves Greece’s cash position,” it said. “In the absence of an agreement, financing sources appear to be insufficient to meet Greece’s financing needs over the foreseeable future.”
Greece’s prime minister, Alexis Tsipras, reportedly plans to press fellow European leaders about the bailout deadlock on the sidelines of a summit in Latvia next week.
Greece Avoids Domestic Default, Cash Scramble Gets Desperate
The Telegraph – Mehreen Khan
Greece scraped together enough funds to avoid a domestic default on Friday, as the near-bankrupt government bought itself vital breathing space before a crucial series of international obligations are due next month.
Athens successfully paid out half of its monthly public sector wage, pension and social security bill, according to the Greek ministry of finance. The obligations are thought to be around €500bn.
The government, which has been without international aid since August, has resorted to desperate measures to continue paying its civil servants and pensioners.
More than a 1,000 local authorities have been forced by presidential decree to transfer their excess cash reserves to the central bank to allow the state to keep its head above water.
In its latest ploy to raise cash, Athens has requested its foreign embassies and consulates also hand over their spare funds to the government.
But municipalities are resisting the confiscation, arguing it violates the government’s fiduciary duties and falls foul of the constitution.
“Running out of money is a relative concept – there is no finite moment the government will run out of cash,” said Justin Knight at UBS.
“By many measures, Greece has already run out of money and could be on the verge of issuing IOUs as they were forced to do to the pharmaceutical sector in 2011″, said Mr Knight.
How Broke Greece is Paying its Bills
Everybody knows that the Greek government’s coffers are almost empty, but over the last few weeks it’s managed to pay bills worth hundreds of millions of euros.
Earlier this week, the country scraped together enough cash to pay its latest loan repayment to the International Monetary Fund (IMF), but it soon became clear that it did so in an unconventional way.
Here, we take a look at the desperate measures Greece is resorting to pay its bills.
All eyes were on Greece at the start of the week, as speculation mounted that the debt-stricken country would not be able to meet a 750-million-euro loan repayment to the IMF due Tuesday.
A default on its loan repayments – due following its two international bailout programs, worth a combined 240 billion euros ($270 billion) — could spark financial chaos in Greece, and even result in the country having to leave the euro zone.
In fact, Greece made the IMF payment a day earlier than expected.
What surprised analysts, however, was how it paid the bill – Greece emptied an IMF holding account to repay the loan, a Greek central bank official confirmed to CNBC Wednesday.
Athens is thought to have raided its account for 650 million euros, and used 100 million euros from its cash reserves to make the payment.
These special IMF accounts contain something called SDR (Special Drawing Rights) – a reserve currency created and maintained by the IMF. The fund allocates a certain amount of these assets to each of its member countries.
In sum, Greece tapped its IMF reserves to pay back…the IMF.
Although speculation as to how long Greece can remain afloat has been rife for months, no one seems sure exactly how much money the country has left.
The dire situation was thrown into sharp relief in April when the government controversially ordered all local municipalities in the country to transfer their idle cash reserves to the Greek central bank.
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