Greek government searches for funds amid fresh speculation about third bailout

The government on Monday scrambled to find ways to raise much-needed funding amid renewed speculation about a third bailout for Greece.

Finance Minister Yanis Varoufakis met with his deputies and other officials to discuss ways of covering the country’s funding needs and debt obligations, which include repayments to the International Monetary Fund. A senior ministry official referred after the talks to “alternative solutions for tackling issues of liquidity in March.” These are believed to include the cash reserves of state bodies; the government may tap around 2 billion of the total 3.5 billion euros they hold.

The first test comes Wednesday, when the government is to issue six-month treasury bills in a bid to raise 1.4 billion euros and refinance maturing debt. The outcome is uncertain, however, as foreign investors appear reluctant to renew their positions while Greek banks have been warned against joining the sale.

Government spokesman Gavriil Sakellaridis sought to allay fears Monday. “The Greek government has been exploring solutions… to ensure there won’t be a single problem with repaying the IMF loan, or its funding obligations in March,” he said.

He also confirmed that Greece’s agreement with creditors to extend its loan program by four months would not go to a vote in Parliament though it would be debated. Meanwhile the government presented the first of a series of proposed reforms that will be voted on by MPs. The bill, aimed at tackling the humanitarian crisis, offers free electricity and food to thousands of households and rent support for up to 30,000 families.

The move came amid mounting pressure from Greece’s international creditors for officials to push forward economic reforms ahead of another Eurogroup summit in Brussels next Monday. German Chancellor Angela Merkel urged Athens to comply with the terms of the country’s bailout. “On this basis, I hope for a good future for Greece as a member of the eurozone,” she said. Her finance minister, Wolfgang Schaeuble, said over the weekend that a failure by Greece to honor any of its scheduled debt repayments would be tantamount to a “credit event,” meaning default. Eurogroup President Jeroen Dijsselbloem also stressed the importance of Greece meeting its obligations in an interview with the Financial Times, but he further indicated that “a first installment” from a pending 7.2-billion-euro aid tranche could be disbursed this month if Athens adopts reforms. Varoufakis all but ruled out such a prospect, saying that he would refuse the money if it depends on Greece continuing with austerity measures. “We could have taken the money, we could have signed Hardouvelis’s e-mail and got the money,” he said, referring to a list of reform pledges sent by Varoufakis’s predecessor to the troika at the end of last year.

Meanwhile Spanish Economy Minister Luis de Guindos said that eurozone countries were in talks over a third package for Greece worth between 30 and 50 billion euros. Speaking at an event in Pamplona, northern Spain, de Guindos said the new program would offer more flexible conditions to Greece which, he said, had no alternative other than European solidarity. Although Dijsselbloem’s spokeswoman Simone Boitelle denied that eurozone finance ministers had discussed a third package for Greece, later in the day European Commission Vice President Valdis Dombrovskis struck a similar tone, saying a third bailout may be needed when the current program expires in June because Greece will unlikely be able to borrow on capital markets.

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