Greece runs out of funding options despite euro zone reprieve

Fri Feb 27, 2015 1:09pm EST
 
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By Jan Strupczewski and Deepa Babington

BRUSSELS/ATHENS (Reuters) - Greece is running out of options to fund itself despite a four-month bailout extension, raising pressure on Athens to quickly implement reforms it has vocally opposed or default on debt repayments in a matter of weeks.

Euro zone and IMF creditors gave Greece until the end of June to complete the bailout program and receive the remaining 7.2 billion euros but it will not be allowed any funds until it

Shut out of debt markets and faced with a steep fall in tax revenues, Athens is expected to run out of cash by the middle or end of March. Its finance minister has warned that Greece will struggle to repay creditors starting with a 1.5 billion euro IMF loan repayment due in March.

Athens has been looking for quick fixes to tide it through the coming weeks. It is expected to get a green light early next week for cheap aid and funding support from the European Bank for Reconstruction and Development that could add up to more than a billion euros, sources from the bank told Reuters.

But this alone will not fill the gap.

Euro zone officials hope the liquidity squeeze will force Prime Minister Alexis Tsipras's nascent government to agree reform plans more quickly than the end of April deadline set by creditors, paving the way for bailout funding to be released.

"The liquidity squeeze is being used to push the Greeks to very quickly start discussions on the review and finish that as soon as possible – not even waiting for the end of April," one euro zone official said.

Other options all appear to have problems. One possibility - the transfer of 1.9 billion euros worth of profits that the European Central Bank made on buying Greek bonds - will not be allowed until Greece has completed the bailout program.   Continued...

 
A man feeds pigeons in front of the parliament building in Athens, February 23, 2015.  REUTERS/Alkis Konstantinidis