ECONOMY

Deputy PM admits cash situation is getting difficult

Greece has both major and pressing liquidity problems that will only be exacerbated unless there is a swift agreement with the country’s creditors, Deputy Prime Minister Yiannis Dragasakis admitted.

“We have not received any tranches since August, and both we and the previous government have been fulfilling all our obligations to our peers,” Dragasakis told Alpha TV in the early hours of Thursday.

“We have an economy that gets money to repay its loans, and this is choking us. There is a liquidity problem and we have obligations that require good cooperation with our partners to be met. There will be a problem unless all institutions and entities play their role,” he warned.

Dragasakis argued that Athens is honoring the agreement it reached with its eurozone peers and accused the latter of waging a public relations war, asking them “to let the government govern.” The deputy prime minister even described what he called the “nonfulfillment” of the February 20 Eurogroup agreement by the European Central Bank as “a unilateral move.”

Late on Wednesday Frankfurt decided to extend the emergency liquidity assistance (ELA) limit by 400 million euros, bringing it to 70 billion.

At the same time the ECB put a last-minute stop to a proposal by the Single Supervisory Mechanism that would have provided for a reduction to the 15-billion-euro ceiling for Greek banks’ purchase of treasury bills. This illustrates that regardless of the state’s cash difficulties, the country’s peers intend to make policy stricter rather than relaxing it, given that negotiations with Athens are not proceeding the way that was expected.

The yields of Greek three-year bonds soared to 24 percent on Thursday, while they had come to 16.7 percent on February 20 and dropped to 12.7 percent four days later.

The benchmark 10-year bond yield reached up to 12.1 percent Thursday, from 8.8 percent on February 24.