Greece uses emergency funds to repay debts as bailout talks continue

20 May 15

Greece’s cash-strapped government has used emergency funds to meet a €750m debt repayment due today, it has been revealed.

Greece’s cash-strapped government has used emergency funds to meet a €750m debt repayment due today, it has been revealed.

The country tapped into its national emergency holding account at the International Monetary Fund in order to gather enough cash to repay €750m worth of loans to the IMF itself, officials have revealed.

Greek authorities took €650m from IMF holding account, which must be repaid within weeks, and €100m from the country’s cash reserves to make today’s payment, Reuters reported. The holding account allows nations to store assets, including gold, for emergencies, but will need to be replenished.

There had been doubts on whether the Greek government could make this cash payment or if it would default and save the money to pay salaries and pensions later this month as it faced a cash crisis due to a deadlock in talks to continue the county’s bailout deal.

As the repayment was being made, Eurozone finance ministers gathered in Brussels on Monday in an attempt to agree a list of reforms with the Greek government, which is needed to unlock additional loans as part of Greece’s €240bn bailout package. The next tranche of €7.5bn in loans is due at the end of April from the troika – the European Commission, the International Monetary Fund and the European Central Bank.

The reform list will also need to be approved by the International Monetary Fund and the European Commission before a four-month extension on its eurozone loan can be signed.

Without this payment, the country may default on other debt repayments, which could lead to exit from the eurozone.

Greek prime minister Alexis Tsipras warned on Monday that the country was close to running out of cash within a ‘couple of weeks’.

‘The liquidity issue is a terribly urgent issue. It’s common knowledge, let’s not beat around the bush.’

Dutch finance minister Jeroen Dijsselbloem, who chaired the Eurogroup meeting, said negotiations had ‘advanced’, but more time was needed to bridge the remaining gaps and to reach a comprehensive agreement.

He said: ‘As agreed in February, a comprehensive and detailed list of agreed reforms is needed as a basis for a successful conclusion of the current review. I would like to reiterate that the agreement of February 20 remains the framework for the negotiations and that a comprehensive deal is necessary before any disbursements can take place.’

Dijsselbloem urged the Greek authorities to accelerate their work with the troika to achieve a successful and timely conclusion of the review.

  • Judith Ugwumadu
    Judith Ugwumadu

    Judith writes about public finance, public services and economics across Public Finance International and Public Finance. She previously undertook reporting stints at Financial Adviser, Global Security Finance and The Sunday Express.

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