Greece running out of options

Greece is running out of options to fund itself despite a four-month bailout extension, raising pressure on Athens to quickly implement reforms it has vocally opposed or default on debt repayments in a matter of weeks.

Eurozone and IMF creditors gave Greece extra time until the end of June to complete the bailout programme and receive the remaining €7.2bn, but it will not be allowed any funds until it passes a review that could take weeks to negotiate.

Shut out of debt markets and faced with a steep fall in tax revenues, Athens is expected to run out of cash by the middle or end of March. Its finance minister has warned that Greece will struggle to repay creditors starting with a €1.5bn IMF loan repayment due in March.

Athens has been looking for quick fixes to tide it over the coming weeks but has not yet found one.

Eurozone officials hope the liquidity squeeze will force prime minister Alexis Tsipras’ nascent government to agree reform plans more quickly than the end-of-April deadline set by creditors, paving the way for bailout funding to be released.

“The liquidity squeeze is being used to push the Greeks to very quickly start discussions on the review and finish that as soon as possible — not even waiting for the end of April,” said a eurozone source.

Other options all appear to have problems. One possibility — the transfer of €1.9bn worth of profits that the European Central Bank made on buying Greek bonds — will not be allowed until Greece has completed the bailout programme.

Greece had hoped it could tap the almost €11bn of leftover money in the Greek bank stabilisation fund, but eurozone finance ministers have decided the money would be returned to the Luxembourg-based eurozone bailout fund. While it would still be available for Greek banks, it could only be released on the say-so from the ECB.

The only source of quick cash left to the Tsipras government now is issuance of treasury bills, or short-term debt that matures in three or six months. However, Athens’ creditors have set a €15bn cap on such debt and it has already been reached.


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