Government’s ‘plan B’ for cash is under way

It appears the state is being particularly conservative with its spending and is drawing as much liquidity as it can from the broader public sector in case the negotiations with the country’s creditors drag on for too long without the disbursement of a bailout installment. However, the state is siphoning off precious cash that would otherwise go to the market, whose reserves are rapidly running out, putting the recovery of the economy at risk.

Bank sources say that 1 billion euros in new expired debts to private parties have been added to the existing amount since the start of the year, while another billion could be added by June. The latest Finance Ministry figures show that in January alone expired debts rose by 300 million euros to reach 3.6 billion.

In the last few months of 2016 there was a decline in state arrears as Athens received a bailout tranche of 1.8 billion to pay off its debts to suppliers and taxpayers.

The bank sources added that repurchase agreements could be increased by 3 billion on top of the existing 11 billion euros, up to the sum of 14 billion. Therefore, the state could increase its liquidity by 4 billion (from debts to be created by June and more repos) in the coming months as a plan B ahead of the 7.4-billion-euro state debt payment due in July.