The Finance Ministry may need to resort to the solution of letting more debts to suppliers and others pile up if it fails to collect the pending bailout sub-tranche of 1 billion euros by the end of the year.
Finance Ministry officials as well as representatives of the creditors even say that while Greece will not go bankrupt in the coming months if it does not receive the 1 billion euros, it may be forced to relive the experience of last spring and summer when the state found itself counting every last euro of its available cash to pay its basic dues.
Greece’s debt servicing payments due in January amount to 568 million euros, of which 458 million concerns a tranche payable to the International Monetary Fund. In February, the amount due will be higher, at 1.6 billion euros, of which 1.5 billion euros concerns interest payments. A further 1.6 billion euros is due in March.
Officials familiar with the matter say that if Greece successfully meets the requirements for the tranche to be released and receives the 1 billion euros by year-end, the state’s February payments will be serviced, though with no margin to spare.
The course of budget revenues to date and the 1-billion sub-tranche to come do allow for some reserved optimism among ministry officials that the government will not have to resort to other solutions for the payment of the state’s dues to its creditors up to February. In theory, the bailout program’s first review should be completed after February, for the disbursement of more funds by the creditors.
However, the government failed to observe the milestones set and if it misses out on the 1 billion euros this month, the situation will become complex. At the end of October it owed 5.8 billion euros in dues to suppliers and in tax rebates, against 3.7 billion at the start of 2015. If it were to resort to another payment freeze it would see that figure swell further, leading to an even greater cash crunch in the real economy.
On the political level, too, the government needs to implement the agreed measures as failure to do so would immediately lead to reform fatigue ahead of difficult policies required, such as the social security reform due early next year.