23rd Oct 2016

Greece running out of cash as talks continue

  • Greece needs to repay €3.2 billion to the European Central Bank this month (Photo: Brett Jordan)

Coalition partners in Greece have so far failed to agree the details of €11.5 billion worth of spending cuts required by international lenders to unblock more aid, just as a minister warned cash reserves are drying up.

The three-party coalition led by Conservative Prime Minister Antonis Samaras was set to meet again on Wednesday (1 August) and try to reach an agreement, after failing to do so in the past few days.

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Samaras had given reassurances to the troika of international lenders (the EU commission, the International Monetary Fund and European Central Bank) on Tuesday that the cuts will be laid out in detail by next week, Ekathimerini newspaper reports.

But Socialist leader Evangelos Venizelos - a former finance minister - opposes further cuts to salaries and pensions, for fear of further social unrest in the recession-hit country.

He is backed by the smaller Democratic Left party, which is also a coalition member. Venizelos would rather implement only €6.5 billion worth of cuts over the next two years and delay the rest for 2015-2016.

Any such deadline extension would mean extra money, with German politicians in recent weeks having repeatedly stated Greece needs to stick to the agreed terms or else leave the eurozone.

EU commission chief Jose Manuel Barroso, during a visit to the country last week, told Samaras in front of reporters that "words are not enough" and the only advice he can give is "deliver, deliver, deliver" on the promises made.

Meanwhile, a Greek deputy finance minister on Tuesday warned there is no time to lose as cash reserves are quickly drying up in the absence of the next tranche from the €130 billion bailout agreed in March.

"Cash reserves are almost zero. It is risky to say until when, as it always depends on the budget execution, revenues and expenditure," Christos Staikouras told NET television.

"But we are certainly on the brink, we did not receive the aid tranche we were supposed to and we have the pending issue of an ECB bond maturing on 20 August," he added, in reference to €3.2 billion Greece needs to repay to the European Central Bank this month.


Europe ready to tackle Greek debt relief

The Greek government has built and broadened alliances in EU institutions and member-states that acknowledge the need to restructure the debt and deliver another economic model for the eurozone.

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