Manna from heaven comes via cash reserves of state entities

By Sotiris Nikas

The Finance Ministry has located an unexpected source of liquidity in the cash reserves of various state entities, amounting to some 3 billion euros, which can be used as a cushion in case the government needs to cover any gaps in the country’s funding program.

The good news came after the State’s General Accounting Office asked all state companies and corporations, social security funds etc to draw up a complete account of their cash reserves. Much to everyone’s surprise, it emerged that thousands of state entities have savings that add up to 3 billion euros.

For instance, the National Telecommunications and Post Commission (EETT) has, according to sources, cash reserves amounting to 200 million euros. These are funds that are not invested in the Bank of Greece but remain in the corporations’ coffers.

The Finance Ministry has drafted a plan for the utilization of these reserves given that they belong to the state. Senior ministry officials say the idea is not to rely on the cash reserves in the case that funding gaps should arise, but to use them as a cushion. Should the need to tap into them arise, the ministry can create instruments that the state bodies can invest in.

This will allow the government some much-needed breathing room in managing situations such as it is experiencing now, as bailout installments have stopped coming and its disposable cash has become dangerously diminished.

Through the use of the state entities’ reserves, the state will be able to cover its short-term needs (i.e. for 10-20 days or even one to two months) without requiring the approval of its creditors. At the same time, the scheme will not create any problems to the liquidity of the agencies as they will effectively be lending the money for just a few days.

This unexpected reserve of cash was located at the start of the year and has provided some relief to the government as its coffers begin running dry due to the delay of the bailout tranches from the last quarter of 2013.