State struggling to meet pension cash deadline

The Finance Ministry’s efforts to obtain access to desperately needed cash belonging to state entities have stumbled into a number of obstacles, meaning that it remains uncertain whether it will be able to supply the social security funds with the money needed to pay pensions next week.

Sources say that the Finance Ministry has informed the Labor Ministry that while it will supply the 850 million euros required on April 27 and 28, for the time being this amount is not to be found in the state coffers.

The government expected the legislative act that provided for the compulsory submission of the cash reserves of general government entities (with the exception of the pension funds) into a central account at the Bank of Greece to fetch at least 1.5 billion euros, to be placed at the state’s disposal. However, it is estimated that only 300-400 million euros has been deposited in the BoG, and it is considered unlikely that this amount will grow significantly next week.

As a result, at this stage projections are showing a shortfall of about 1 billion euros, making it uncertain whether the 850 million euros will be forwarded to pension funds early next week.

Furthermore, the social security funds, which are not obliged to hand their cash reserves over to the BoG, appear reluctant to do so voluntarily. On Thursday the governing board of the Single Fund for the Social Insurance of Bank Employees (ETAT) rejected the transfer of 150 million euros of its reserves to the central bank. That followed two written statements by the unions of employees at Alpha Bank and the former Emporiki, as they opposed the switch of cash into repos.

The question of the transfer of cash reserves belonging to the Social Security Foundation (IKA) will be discussed at the fund’s board meeting next week. If there is a decision in favor, it could mean the transfer of 150 million euros at an interest rate of up to 2.7 percent, against 2.1 percent that commercial banks offer IKA.

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