The Greek government is trying to raid social security funds for cash to pay its bills
REUTERS/Francois Lenoi
In a recent interview, Greek finance minister Yanis Varoufakis acknowledged that the country was facing a squeeze on its finances following disappointingly low tax revenues in January. He said that "we have money to pay salaries and pensions of public employees...[but] for the rest we will see". Yet it appears that even that now appears to have been optimistic.
According to the Financial Times, Athens is putting pressure on government departments to hand place their bank deposits into a Common Fund, managed by the Central Bank. This would give central government more control over how it manages the nation's finances as it seeks to raise €1.2 billion in debt repayments owed to the IMF by March 2o and a further €1.5 billion in additional cash to pay for the state's pension and wage bills.
All in all the state entities are estimated to hold €2bn of cash reserves, enough to get the government through the next couple of months as it negotiates with the European Commission, the ECB and the IMF on a reform programme that would unlock the next tranche of bailout funds. However, handing over the money could put key social security programmes at risk if those negotiations fail, including support for the unemployed.
The FT reports Theodoros Ambatzoglou, chairman of the OAED, which manages the country's unemployment benefits programme, as saying that transferring the funds is "too risky a step to take" as a Greek default could compromise the programme and even mean criminal charges levied against those who allowed the programmes to fail.
However, if its overtures are refused the government could itself go down the legal route to force departments to comply with its request. It could dust off a seldom used law that bans state bodies from holding deposits at commercial banks for more than 15 days in order to compel them to hand over the cash.
The strains of the Syriza-led government's hardline approach to its negotiations is finally beginning to show, it seems.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- 2024 LS polls pegged as costliest ever, expenditure may touch ₹1.35 lakh crore: Expert
- 10 Best things to do in India for tourists
- 19,000 school job losers likely to be eligible recruits: Bengal SSC
- Groww receives SEBI approval to launch Nifty non-cyclical consumer index fund
- Retired director of MNC loses ₹25 crore to cyber fraudsters who posed as cops, CBI officers