BoG setting up special account for debt payment

The Bank of Greece is reportedly creating a special reserve account where funds will be deposited exclusively for the repayment of the country’s debts.

The relevant decision, signed by the Deputy Minister of Finance Giorgos Houliarakis, was published in the Government Gazette.

The account will reportedly draw on funds that the European Stability Mechanism (ESM) will provide to Greece until the end of the bailout program in August 2018. The account will also draw on borrowing from international markets.

According to a June 15 Eurogroup decision, future disbursements from the ESM should not only cover the country’s borrowing needs but also create a cushion that will serve the country’s needs in the period after the bailout program ends.

According to the Commission, that cushion will amount to 9 billion euros. The aim of the cushion is for Greece to regain the confidence of the markets.

According to the Eurogroup decision, the country will receive ESM loans of 18.4 billion euros in four installments. Reports indicate that the first installment in the new reserve account will be the 1.4 billion euros raised by the Greek state in its return to international markets last month.