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Greek Govt Collects Public Sector Money With Legislative Order to Meet Needs

Pedestrians walk past the bank of Greece in Athen

The Greek government has issued a legislative order today ordering the country’s public sector operations to transfer excess funds to the Bank of Greece (BoG) in a dramatic attempt to cover its needs ahead of the upcoming International Monetary Fund (IMF) loan repayments in May. Athens has been tapping into the public money reserves in temporary transactions in what is seen by analysts as a sample of the country’s desperate need of fresh funds, amid the SYRIZA-led government’s attempt to convince international creditors to unlock further financial aid.

Today’s legislative order excludes pension funds as well as the idle money of some state-owned firms, as their cash reserves are designated to cover the immediate payment of those bodies own needs. “This is a pre-emptive move to ensure that they will be able to secure as much liquidity as possible because of the squeeze,” an Athens-based analyst told Reuters, adding that “there are still some billions of euros in cash reserves parked in banks by state entities.”

The public entities are called to bank the money they do not immediately need at the country’s central bank, while the money lent will be used within one to 15 days against collateral and then they will be paid back with interest at expiry. According to Greek Finance Ministry officials cited by Reuters, the country is in need of around two billion euros coming from its public sector remaining cash reserves in order to cover the civil service wages and pensions at the end of the month. Although that has been officially denied by the Finance Ministry.

Apart from the above payments, the Greek government is facing yet another deadline as it has to repay an IMF installment of almost one billion euros due in May. The Greek government has repeatedly declared it will honor its obligations to international creditors but at the same time senior government officials have distinguished the wages’ and pensions’ timely payment as a priority.

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