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Greek gv't admits cash shortfall, domestic borrowing

The Greek government admitted Wednesday it had a cash shortfall and its transfer of cash reserves from local government and other public entities was "domestic borrowing" to cover immediate financing needs.

Meanwhile, a deal between Greece and international lenders on the list of Greek reforms in exchange for further vital aid remained elusive, despite two months of deliberations.

Greek Deputy Minister Dimitris Mardas said during an interview with a local television channel that the Greek state was short of about 400 million euros (about 430 million U.S. dollars) urgently needed to pay salaries and pensions on April 24.

The Greek official also noted that Greece has reached a "breaking point" with regards to its cash reserves from February this year.

Mardas clarified shortly afterwards, when speaking to another television station, that the required funds would be available on time by drawing on cash reserves of public entities through a central Bank of Greece account.

As such, the state's domestic obligations and obligations to lenders (Greece repays IMF loan installments on a monthly basis) are fully guaranteed not only for April, but also for May, finance ministry officials stressed.

The obligatory transfer of such "idle" cash reserves has sparked strong reactions by opposition parties and local administration officials, as the government swiftly passed legislation on Monday evening allowing it to access the cash. The legislation doesn't require the immediate ratification by the parliament.

However, the government assured that the funds would be paid back with interest, stressing that the extraordinary measure was deemed necessary to address the emergency.

But regional governors warned they would not cooperate, and called the move unconstitutional since it undermined the autonomy of local administration. They argued it deprived them of necessary funding for the effective functioning of municipalities.

Mardas explained on Wednesday that with these cash reserves, the central government intended to create a sort of cushion to ensure that there would be no cash crunch until late May.

Minister of State Nikos Pappas acknowledged when speaking in parliament that the "domestic borrowing" was carried out because negotiations with creditors had led to some difficulties and Athens was attempting to overcome these obstacles without having to accept a deal which would not benefit the Greek people.

Some cabinet ministers have expressed optimism in recent days that an "honest compromise agreement" will be reached with creditors soon, underlining that default scenarios were unfounded. However, others have implied that Athens could end up holding fresh national polls or a referendum in the coming weeks should a deal with European partners not be clinched.

[Source: Xinhua, Athens, 22Apr15]

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small logoThis document has been published on 23Apr15 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.