Greece fails to get fast cash from eurozone rescue fund

Greece failed yesterday to secure a quick cash payment from the eurozone rescue fund to help stave off potential bankruptcy next month, raising pressure on Athens to deliver a convincing reform programme within days.

Athens had appealed for the European Financial Stability Facility to return €1.2bn it said it had overpaid when it transferred bonds intended for bank recapitalisation back to the Luxembourg-based fund this month.

However, senior eurozone officials agreed in a telephone conference yesterday that Greece was not legally entitled to the money, although they said they would consider how to deal with the issue in the future.

The decision by the Eurogroup Working Group was a setback for leftist prime minister Alexis Tsipras, who is struggling to secure fresh funds to keep his government afloat while he presents a comprehensive reform plan and argues for debt relief.

A source familiar with Greece’s financial position told Reuters on Tuesday that Athens would run out of money on April 20 without new cash.

EU paymaster Germany, to which Tsipras made a fence-mending visit this week after weeks of acrimony between Athens and Berlin, was among the countries that opposed handing back the €1.2bn.

“We see no reason to release it”, German Finance Ministry spokesman Martin Jaeger told a routine news conference, adding that EFSF funding was made available to Greece last year as a safeguard during bank stress tests but had not been needed.

Jaeger said eurozone finance ministers decided last month, when they extended Greece’s bailout agreement, to transfer that money back to the EFSF in Luxembourg where it would be available for bank recapitalisation should Greece need it in future.

The German stance made clear that despite the improved atmosphere in relations between Tsipras and Chancellor Angela Merkel, Berlin has not softened its position in substance.

Tsipras has promised to deliver a full list of planned reforms by Monday, but it is not clear if it will include measures agreed by the previous conservative-led government such as privatisations and pension reform.

Eurozone officials have said it will be hard for Athens to make the budget numbers add up without a forecast €4bn due from the sale of state assets this year and savings through retirement and a merging of pension funds.

However, both reforms are bitterly opposed by the leftist Syriza party of Tsipras, and ministers have already halted several planned privatisations.

Greece is also hoping to secure another €1.9bn in profits made by the ECB on past purchases of Greek government bonds, but the eurozone has tied that to approval of its reforms by the institutions representing its main creditors — the IMF, the ECB and the European Commission.


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