Cash buffer set to be reduced
The famous “cushion” of 37 billion euros will very soon start to “deflate” until it is reduced to around €12-13 billion, in about three years.
That is the plan, provided that the European Stability Mechanism gives its approval for the release of the so-called “hard” core of the “cushion,” €15.7 billion, which is reserved in a special account in the Bank of Greece and comes largely from its own loan (€9 billion) and bond issues.
As for the remaining part, about €20 billion, of the cash buffer, it concerns the assets of the general government entities, which the government borrows in the short term to meet its needs. After all, this portion already existed at the end of 2014, it was €16 billion, as former finance minister Christos Staikouras has argued.
The ESM’s permission to freely access the €15.7 billion is estimated to be given probably in the first quarter of 2024. The formal condition was the country’s exit from enhanced supervision, which was already met in August 2022, but in essence the permission also requires the investment grade. Having already secured investment level from three rating agencies, the way seems open for a positive decision of the ESM, which – as analysts point out – will be emblematic for the markets.
