By Sotiris Nikas
The new government plan aimed at avoiding a new loan from the eurozone provides for a return to the international money market before the May 25 European elections and an agreement for the creation of a credit line from the European Stability Mechanism (ESM).
In weekend interviews with German newspapers, Prime Minister Antonis Samaras and Finance Minister Yannis Stournaras stressed that Greece does not need any more bailout loans, thereby responding to German Finance Minister Wolfgang Schaeuble’s statement that the most likely scenario would be for Greece to take a new loan of 10-20 billion euros to plug the holes in its program.
The funding program for Greece appears to have a gap of between 13 and 14 billion euros for 2014 and 2015. This is a result of the bond buyback program in December 2012 that required 11 billion euros and the shortfall in revenues from the country’s privatizations program. When Greece used the funds for the buyback program, the eurozone had promised to cover the gap that would be created, so the government is now asking the eurozone to fulfill its pledge by utilizing solutions that do not include a new loan package.
These solutions include the refinancing of instead of paying off the bonds issued by former Finance Minister Giorgos Alogoskoufis to support Greek banks in 2009, amounting to 4.4 billion euros. However, the European Central Bank is opposed to this plan. Another solution could be an extension of the repayment time for the bonds the Eurosystem bought before the outbreak of the crisis, amounting to 5.6 billion euros. Athens also recommends the use of the hitherto unused funds for the recapitalization of the credit sector, which come to 8-9 billion.
The government is further targeting an early bond issue, up to 1.5-2 billion euros, which could plug some holes, and the use of a credit line from the ESM for Greece to draw liquidity when necessary, although for that to happen, Greece will first need to prove it has secured access to the markets.