Greece admits scrapping the bottom of the barrel for money
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GREECE admitted yesterday it was scrapping the bottom of the barrel for cash as another huge debt repayment loomed, adding pressure to reach a rescue deal with its EU-IMF creditors to avoid default and crashing out of the eurozone.
Athens only managed to repay 750 million euros (US$845 million) due yesterday to the International Monetary Fund by tapping into an emergency account, a central bank source told AFP as alarm grew over Greece’s dire finances.
But billions more in loan repayments are due over the next three months, and Greece’s Finance Minister Yanis Varoufakis warned that his country risked running out of cash within two weeks if no deal was reached by then with its international creditors.
The crisis sent European stocks sinking yesterday, mirroring sentiments across Asia and on Wall Street.
“The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush,” Varoufakis said on Monday after talks with his Eurogroup counterparts in Brussels. “From the perspective (of timing), we are talking about the next couple of weeks.”
Athens has been locked in negotiations with the European Union, the European Central Bank and the IMF, seeking to unlock 7.2 billion euros worth of remaining bailout funds that the creditors are refusing to release unless Greece signs up to certain economic reforms.
With the two sides standing firm on their positions and yesterday’s payment to the IMF due, the government was informed last week by Greece’s central bank chief Yannis Stournaras that it could draw 660 million euros from a special account held at the IMF, like all member states.
That account holds Greek reserves and is only meant to be used in cases of “extraordinary need”, the central bank source said, adding that subsequent meetings with government officials and the IMF led to the release of the funds.
The source added that it was not the first time that Athens was tapping into the fund, but that in previous cases smaller sums were withdrawn.
Greece would need to replenish those funds quickly, experts said.
The remainder of the sum due to the IMF was scrapped together by the government.
Even though it narrowly averted default yesterday, Greece faces a tough debt repayment schedule in coming weeks.
Around 1.5 billion euros are due to the IMF in June and then another 3 billion euros to the ECB in July and August.
“While the Greeks may have stumped up some cash to appease their creditors in the short term, unless they can get through the current impasse and reach agreement on austerity measures, markets will remain jittery,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
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