From now on the government will have to reach for the country’s liquidity safety cushion to cover its cash requirements as a result of the reduction of state revenues and the support measures for households and enterprises.
According to a Finance Ministry source, 14 out of the 20 billion euros of that cushion will be absorbed to cover needs up to end-June. There is a separate cash buffer of 15.7 billion euros under the surveillance of the European Stability Mechanism (ESM) which will not be touched for now, although the same source noted that “the buffer is meant precisely for such cases of major crisis.”
The 20 billion euros of available cash reserves are from Greece’s various general government entities, previous bond issues and primary budget surpluses of previous years. Most of this cash has been deposited at the Bank of Greece, although another part remains at commercial lenders.
“Up to July we will make ends meet without problems, while after that it will all depend on the conditions,” the same source commented. He added that it is still too early for the government to decide whether it will utilize the ESM credit line – this is an issue that worries the ministry as it is not clear whether it will come with conditions reminiscent of the 2010s. For now it wants to avoid it, but it is not certain it will be able to continue doing so. The same source estimated on Wednesday that the European Union will be more generous, recalling its reaction to Greece a decade ago when it took its time before agreeing to a debt haircut.
The first signs of fiscal problems emerged on Wednesday in the first-quarter budget data. Deputy Finance Minister Thodoros Skylakakis said that Greece missed out on revenues of some 600 million euros in March. Total revenues were 403 million euros above target, but this was thanks to the dividend of the Bank of Greece and the revenues from SMPs and ANFAs that were originally set to be collected this month.