April 21, 2015


Greece raids cash reserve of state-owned companies

The Greek government issued a presidential decree yesterday obliging state bodies to transfer their cash reserves to the central bank for state use. Hospitals and local municipalities are targeted, pension funds though are excluded, Kathimerini reports. This is an unprecedented move and highlights once again how dire the situation is. The decree on a government website said, according to Bloomberg:

“Central government entities are obliged to deposit their cash reserves and transfer their term deposit funds to their accounts at the Bank of Greece,”  The “regulation is submitted due to extremely urgent and unforeseen needs.” 

There are different estimations circulating through the press as to how much the government is expecting to raise with this move. Kathimerini says €1.2bn. Bloomberg cites two insiders with €2bn, and KT Greece cites Greek media reports with €3.5bn. The money is to be used for IMF payments in May and to allow the government to pay wages and pensions this month, the papers say. 

This highly controversial move has the potential to turn government supporters into opponents. The decree has already been sharply criticised by municipality unions and of course opposition parties. President of KEDE union George Patoulis is outraged and promised mobilisation according to Paraskhnio (hat tip @YanniKouts) and some conservative lawmakers want to sue the government for this, according to KT Greece. Athens Mayor Kaminis tries to oppose the bill, according to @NickMalkoutzis. The situation could also aggravate the tension between the left platform of Syriza and the more moderate faction, which still seems to be hopeful that a deal can be reached with the Brussels Group before the eurogroup meeting May 11. Where is Alexis Tsipras? He was meeting with Paul Krugman while this breaks loose. Surreal. 

Will we see a deal with the eurogroup? The International press reports there is little or no progress in talks with the Brussels Group, which continues to meet in Paris over the next couple of days ahead of the eurogroup meeting April 24, according to Greek Reporter. There certainly is no progress on the labour market or pension reform front. They have not even agreed on 2015 budget targets, Bloomberg reports. The warnings from EU officials get more urgent by the day, and those from Greek politicians more defiant. Giannis Dragasakis in an interview with To Vima (hat tip Greek Reporter), said the government will stand firm to its red lines, despite the increased fears that the country could soon be driven to a default.

Alexis Tsipras is meeting with the head of Gazprom today. While a binding deal on the pipeline or a Russian cash payment is unlikely any time soon, a gas-price discount is entirely possible for Greece as early as today, writes Bloomberg. Yesterday they invited Chinese firms to bid for deep-sea oil and gas exploration later this year. The Greek government has given two more months until July 14 to submit their bids for test drilling on 20 offshore blocks in the Ionian Sea and off southern Crete in a bid to sound out more potential suitors.

There is a new peak in yield on Greek notes maturing in July 2017 at 28%, according to Bloomberg. Shares in Greece's Piraeus Bank fell to their lowest level since the euro was introduced, Reuters reports.

Our other stories

Today we also have stories on what might stop a parallel currency working for Greece; on Portugal’s stability programme; Renzi’s bold move against his dissidents; why Asian countries are no longer considering a monetary union (guess); where the Spanish parties are lining up; and whether the PP is a criminal organisation.

Eurointelligence Professional Edition

For premium access, please log in or register 
for a free 14 day trial for the Eurointelligence Professional edition. The best independent intelligence on the eurozone anywhere in a fast and easy to read format.

A message from Wolfgang Münchau

Welcome to the eurointelligence.com homepage.

Since 2006 we have been providing our readers from central banks, European and international institutions and the financial sector with our daily morning newsbriefing, each morning, at 9am CET, Mondays to Fridays. We are independent from governments and institutions, so you get our honest, sharp and frequently humorous take on the news and the debate. The subjects we are currently focusing on are all the issues relevant to the eurozone - the discussion about Greece naturally, on quantitative easing and its various effects, the incipient eurozone recovery, relations between the eurozone and the world, as well as important developments in member states, with a repercussion on the rest of the eurzone. 

Many people were surprised by the re-emergence of the eurozone crisis. Eurointelligence readers would not have been. We have given our readers an honest assessment of what and what has not been resolved, at a level of a detail that has no match in the published media. Eurointelligence is the place to go to keep ahead of events in the eurozone.

I would like to invite you to register for a free 5-day trial, without commitment, so you can judge for yourself.

Wolfgang Münchau
Director Eurointelligence

AXA - Our Partner