BUSINESS

Delays threaten debt repayment funds

SOTIRIS NIKAS

TAGS: Finance

While state debts to third parties constantly on the rise, and currently exceeding 7 billion euros, the entities that are responsible for dealing with the repayments have yet to send the Finance Ministry their requests for amounts due, even though there is 1.8 billion euros in the state coffers marked specifically for this purpose.

Greece received that 1.8 billion euros from its creditors with the direct order for it to go into the market via the repayment of expired debts. However, state entities are delaying the process, risking the loss of the funds altogether.

According to Finance Ministry figures, at the end of May, total expired debts to suppliers and taxpayers amounted to 7.02 billion euros. This was 300 million euros higher than the figure at end-April, most of which (190 million euros) concerned new debts run up by the social security funds.

According to the timetable of the bailout agreement, the state should have returned some 500 million euros to suppliers and taxpayers in June. Another 800 million euros is due to follow this month, plus 500 million in August, for a total of 1.8 billion this summer alone.

However, the delays recorded by various state entities mean that the state is running the risk of losing those funds. Furthermore, if they are not used for that express purpose, the country’s creditors may change their minds about providing additional funding for paying off more state debts to the domestic market after the summer.

The agreement between Athens and the lenders states that if the loans issued for covering the state’s debts and deposited in a special account remain unused for more than three months, then the European Stability Mechanism (which makes those disbursements) reserves the right to ask for the money back or redirect it to other funding needs of the program, such as the national debt repayment.

The agreement further states that unless at least 80 percent of the debts related to the loans have been repaid in time, no new disbursement for this purpose will take place. Therefore, if debts of 1.44 billion euros are not repaid in time from the 1.8 billion received for that reason, then the following tranche for debt repayment would be lost. That tranche amounts to 1.7 billion euros and can be sent to Athens up to end-October – otherwise Greece will miss out on it.

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