Gov’t cash needs lead to bond auction

Greece is seeking to borrow 1.2 billion euros by auctioning three-year bonds next week, in a bid to meet the increased need for money this month. The decision to seek the loan was made public to international capital markets through the Reuters news agency yesterday. The Public Debt Management Agency said it will auction 1 billion euros of three-year 2.75 percent notes on December 16. The settlement date for the paper, which will mature on June 21, 2006, falls on December 19, Reuters reported. The government is expected to seek another 20 percent, for a total of 1.2 billion euros. It is the first time in more than a decade that the Greek State has hurriedly had to seek an international loan in order to meet current needs at the end of the year. The last such occurrence was during the very difficult period of the early 1990s, when the borrowing of large amounts was the only way to meet the cost of wages and pensions on time. And it is a sign of the difficult fiscal position of the country. At the beginning of the year, the government was planning to borrow 27 billion euros, but borrowing has now exceeded 33 billion. The additional borrowing is due to the government’s having to satisfy a number of demands which have arisen in the runup to next spring’s elections and which cannot be met out of the public revenues. Meanwhile, the Finance Ministry has delayed announcing the analytical figures for the budget’s progress in the January-October period. Many attribute this delay to the government’s anxiety to hide the worsening of indicators in view of the parliamentary debate on the 2004 budget proposal which begins on Thursday, December 18. Figures that the Finance Ministry sent to the International Monetary Fund’s database recently show disappointing results for the 10-month period. Borrowing requirements exceeded 10 billion euros, an increase of 80 percent over the same period last year. The target for the whole of 2003 was borrowing requirements of 9.14 billion euros.