European foot-dragging could leave Greece short of 2.0 billion euros ($2.7 billion) this year as some eurozone creditors are reluctant to roll over their Greek debt holdings, Greek and eurozone sources involved in the matter told Reuters.
Greece’s creditors – eurozone countries, the European Central Bank and the International Monetary Fund – agreed last December that the bloc’s 17 national central banks would replace some of the Greek bonds they hold with new Greek paper as the debt matures.
This measure, called the “rollover of ANFA holdings,” was expected to spare Greece from having to redeem 3.7 billion euros of debt in 2013-2014 and 1.9 billion euros in 2015-2016.
But the bond rollover has hit a snag because some central bankers are worried that it might be seen as direct financing of the Greek government, Greek officials said. The law governing the ECB forbids it from such direct financing.
“The main issue is that ANFA is considered by some central bankers as direct government financing from the ECB,” a senior Greek finance ministry official told Reuters.
“We have kept our pledges, now our lenders must do the same,” another Greek official said.
Senior eurozone officials with direct knowledge of the matter confirmed that a gap could open up in the bond rollovers.
“There could be a financing gap between 1.5-2.0 billion euros in Greece until the end of this year and the question is how will Greece deal with this and make it,” another senior eurozone official told Reuters.
The shortfall is a threat to Greece’s bailout program because International Monetary Fund rules require the country to be fully financed at least 12 months in advance in order to continue the program of support for Athens.
In a report last month, the IMF said it projected a financing gap of 4 billion euros would open in the second half of 2014 and that additional financing should be quickly found to cover it.
Athens and euro zone officials were already working on a “technical” solution to plug the hole, the one Greek official said.
Greece’s financing gap may widen further due to home-grown problems caused by the slower-than-expected pace of privatizations.
Athens failed to find any buyers for natural gas firm DEPA last month, which could blow another hole worth about 1 billion euros in the program’s financing.
“It’s kind of a deja vu with Greece,” one of the eurozone officials told Reuters. “Real implementation of prior actions is slowed by the performance of the public sector… privatization is proceeding slowly as well.” [Reuters]