Greek cash seen lasting into June, no EU deal imminent

Wed Apr 22, 2015 2:17pm EDT
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By Angeliki Koutantou and Jan Strupczewski

ATHENS/BRUSSELS (Reuters) - Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default as hopes receded of a deal with its creditors to release fresh aid.

The European Central Bank raised its ceiling on emergency lending by the Greek central bank to Greek banks by 1.5 billion euros to 75.4 billion euros, giving them a bigger buffer to cope with deposit withdrawals, a banking source said.

Three sources familiar with ECB thinking denied a report that the Frankfurt-based bank had tightened the screws on Greek banks by slashing the value of the collateral they must present to receive emergency liquidity to stay afloat.

Greece has received two international bailouts worth 240 billion euros since 2010 but its economy has shrunk by some 25 percent, unemployment has soared and a leftist-led government elected in January has refused to complete a reform program that includes measures it says worsen the economic slump.

The head of the Eurogroup Working Group, which prepares decisions for euro zone finance ministers, said Athens would not present a new list of economic reforms required to unlock further EU funds when the ministers meet in Latvia on Friday, but Greece should be able to stay solvent till June.

"The liquidity situation in Greece is already a little tight, but it should be sufficient into June," EWG chairman Thomas Wieser told Austrian broadcaster ORF.

Greek Deputy Finance Minister Dimitris Mardas said the government aimed to have a 2.5 billion euro ($2.7 billion) cash buffer by forcing state entities to lend to the state in order to cover payments until the end of May.

Shut out of bond markets and running out of money to pay civil servants, pensioners and suppliers and service its debt, the government issued a decree on Monday ordering public bodies to transfer their spare cash to the central bank.   Continued...

A Greek national flag flutters atop Lycabetus hill in Athens, April 22, 2015. REUTERS/Kostas Tsironis