Shut out of debt markets, with aid from lenders frozen and with Mario Draghi, ECB president, blocking avenues suggested by Athens for temporary state funding in a drive to force Greece to accept the programme agreed by the previous government, Athens is in danger of running out of cash in the coming weeks as it faces a 1.5 billion euro loan repayment to the International Monetary Fund this month.
At least part of the state’s cash needs for the month will be met by repo transactions in which pension funds and other state entities sitting on cash lend the money to the country’s debt agency through a short-term repurchase agreement for up to 15 days, debt agency officials told Reuters.
Debt officials described the repos as advantageous for both sides, arguing that the funds get a better return on their cash than what is available in the interbank market.
“It is not something new, it’s a tactic that started more than a year ago and is a win-win solution. It’s a proposal, we are not twisting anyone’s arm,” one official said.
One source familiar with the matter has previously said Athens could raise up to 3 billion euros through such repos, but that it was not clear how much of that had already been used up by the previous government.
“There is a sum that has already been raised this way,” the debt official said without disclosing specific numbers.
Athens – which has monthly needs of about 4.5 billion euros including a wage and pension bill of 1.5 billion euros – is running out of options to fund itself despite striking a deal with the euro zone to extend its bailout by four months.
Faced with a steep fall in revenues, it is expected to run out of cash by the end of March, possibly sooner, though the government is trying to assure creditors it will not default.
“We are confident that the repayments will be made in full, particularly to the IMF, and there will be liquidity to get us through the end of the four-month period,” Finance Minister Yanis Varoufakis said during a late-night talk show on Star TV on Monday. “March is sorted.”