Gov’t ‘relies too much on costly repos’

Gov’t ‘relies too much on costly repos’

Former deputy prime minister and finance minister Evangelos Venizelos accused the Finance Ministry on Wednesday of creating problems for the next government through the extensive domestic borrowing it has recently resorted to in order to boost the cash buffer for the country’s so-called clean exit from the bailout program.

Venizelos made the allegation at an event on public and private debt, using data that business consultant Giorgos Prokopakis, a former Columbia University professor, had presented earlier during the event. The data showed that the public debt has soared by 10.5 billion euros in spite of the huge primary surpluses recorded in the last couple of years. They also revealed a major increase in domestic borrowing via repos.

Prokopakis said that minister Euclid Tsakalotos’s policy has relied excessively on the “creative management” of short-term borrowing and the compulsory withdrawal of liquidity from the economy.

He explained that the cash buffer relies to a great extent on this short-term borrowing – i.e. funding from state entities – with the cost of servicing the repos soaring to 5.07 percent in 2017, beating even that of treasury bills.

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