Financial Times: Athens is ‘rapidly running out of cash’
Greece’s deal with its creditors to extend its €172bn bailout by four months brought a sigh of relief across the Eurozone, but while the compromise may have spared Athens the risk of bank runs and even bankruptcy, plenty of risks loom over the next four months, Financial Times reported.
Although the four-month extension was approved by finance ministers from all 19 eurozone capitals on Tuesday, several national parliaments must now sign-off as well most notably in Germany and Greece itself.
Politicians in both countries insist passage is a foregone conclusion, but it could be messy.
The more difficult battle could come in Greece, where far-left members of the ruling Syriza party have begun to complain about an abandonment of campaign promises to end the current bailout once and for all.
In Germany, the ruling coalition commands such a large majority that passage in a Bundestag vote on Friday is largely assured.
But defections from Chancellor Angela Merkel’s Christian Democratic Union could be sizeable, with several already voicing public opposition because of doubts about the reform list.
Even if the extension is approved in Athens and Berlin, none of the €7.2bn in bailout aid remaining in the programme will be distributed until Greece completes the existing requirements, which could be months.
That poses an urgent problem: analysts believe Athens is rapidly running out of cash last month tax receipts were nearly €1bn below target and may need outside assistance before the end of March.
Greek banks are currently relying on emergency central bank loans to keep operating, so purchasing more T-bills would essentially amount to buying an illiquid asset with emergency liquidity assistance — something to which ECB officials object.
It would also mean central bank cash is being used to finance the Greek government, which is a violation of EU law.
The International Monetary Fund and the ECB — two of Greece’s three bailout monitors — have expressed concerns about the reform pledges, meaning Athens will have to address any shortcomings by April if either is to sign off on the €7.2bn payment.
Then comes an even bigger challenge: negotiating a third bailout for when the extension expires in June, Financial Times concluded.