State liquidity concerns set to grow by the month

The government’s cash problems will start at the end of February, as projections show that the balance of revenues and expenditure will then swing toward a deficit. The problem will continue to grow from then on, as within one month – by the end of March – there will be a hole of 5 billion euros in the public coffers.

Former Finance Minister Gikas Hardouvelis had repeatedly stated in recent weeks that the country’s funding needs would be particularly high in March. Sources say that the state’s cash reserves currently stand at less than 2 billion euros. By the end of February this amount will have evaporated, even if the maturing treasury bills are refinanced with new issues to be covered by Greek banks. The state’s obligations next month amount to 4.36 billion euros and in March they will reach 7.27 billion – or a total of 11.63 billion in the next couple of months.

In February the government will have to refinance treasury bills of 2.4 billion euros, repay loans and interest of almost 1 billion euros to the International Monetary Fund, and pay other interest that adds up to 900 million. The first key date is February 6, when T-bills worth 1 billion euros are set to mature. The absence of foreign investors means Greek banks will have to shoulder the new issue of T-bills, but even that will not be easy, given that in the latest issue one of the four systemic lenders refrained from buying all of the T-bills it had been due to, with the Bank of Greece stepping in to bridge the gap.

Three T-bill issues mature in March, when loans of 1.6 billion euros must also be repaid to the IMF. In addition, the state will have to pay interest of 800 million euros and 200 million in other obligations, while a bond that was not restructured, worth 78 million euros, will also mature. So it seems clear that March will the toughest of the next few months, and as things stand the cash reserves will have drained away by the start of that month.