Feb. 24 to be the first crunch day for Greek state coffers
February 24 is expected to be the first crucial day for state finances, as projections of cash flows see state coffers starting to run dry on that date. Finance Ministry officials, however, assure they have identified resources they could tap if a small extension on Greece’s bailout obligations, up to the first week of March, is granted from the eurozone.
The state of cash reserves – not robust before – has deteriorated further in recent days due to a shortfall in revenues, as a 1-billion-euro hole in January revenues is putting the execution of the state budget in jeopardy and hampering the management of cash reserves.
According to figures released yesterday by the Bank of Greece, in January the net cash result of the central administration posted a deficit of 217 million euros, against a surplus of 603 million in January 2014. Budget revenues reached 3.1 billion euros, against 4.4 billion in January 2014, while expenditure dropped to 3.2 billion from 3.6 billion last year.
Given these figures, the Finance Ministry estimates that cash reserves will run out next Tuesday. It has the option, however, of using the reserves of general government entities kept in commercial banks in order to cover short-term needs next week. However, the problem that cannot be addressed as things stand concerns needs for the first week of March.
Unless something changes drastically to the country’s funding, Greece will not be able to fulfill all of its March obligations.
Finance Minister Yanis Varoufakis had called on the European Central Bank to increase the limit of treasury bills to 23 billion euros from the current 15 billion in a bid to address this shortfall. The additional funds would have covered the state’s short-term obligations while also providing a cushion until the Greek government is able to strike a deal with its eurozone partners.
The request, however, was rejected, as the ECB deemed it an act of direct monetary funding: In practical terms the European Central Bank would have been financing the obligations of a state, which contravenes its regulations.
