In a move to ease its cash crunch, the Greek government will take more than €550 million ($589 million) from the country’s bank rescue fund, Reuters reports.
The Hellenic Financial Stability Fund (HFSF) was funded with €50 billion as part of the EU/IMF bailout of Greece. It was used in 2012 to recapitalize stricken Greek banks with European Financial Stability Facility (EFSF) bonds, which the banks can use as collateral for direct funding from the European Central Bank.
Now, with a €1.5 billion ($1.6 billion) loan repayment to the International Monetary Fund and other obligations due this month, the new Greek administration is turning to the HFSF for a cash lifeline, Reuters said, citing banking and government sources.
“This is money for which there is no other claim. It is available for the government,” a senior banker said, adding that the HFSF discussed the cash withdrawal with the European Stability Mechanism, the euro zone rescue fund, over the weekend and “there is no issue.”
The banker said it was up to the government to decide when it withdraws the cash. Klaus Regling, head of the EFSF, said creditors “had no legal claims” on it, according to the Daily Telegraph.
Other bills coming due for the Greek government coming due this month are around €4.6 billion ($4.9 billion) in Treasury bill redemptions, and at least €1 billion ($1.07 billion) in government salary and pension obligations.
Greek Prime Minister Alexis Tsipras has tried to reassure creditors that Greece will not default but, as The New York Times reports, “Greece’s coffers may be empty before the end of this month, as tax receipts shrink and the economy shows signs of lapsing back into recession.”
Greece is due to resume talks with creditors in Brussels on Wednesday, with the aim of unlocking desperately needed funding.
From April through August, the country will need to finance an additional €10.2 billion ($10.9 billion) in Treasury bill redemptions and repay approximately €3.17 billion ($3.4 billion) to the IMF and €6.5 billion ($7 billion) to the European Central Bank.