Greece's governors agree to lend cash to central government

Sat Apr 25, 2015 9:44am EDT
 
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By Renee Maltezou

ATHENS (Reuters) - Greece's governors and other local officials agreed on Saturday to lend cash to the near-bankrupt central government after Prime Minister Alexis Tsipras assured them the measure would last for only a short period of time.

Greek lawmakers approved a decree late on Friday to force state entities to lend cash to the central government in spite of protests by municipalities and labor unions.

The measure, which was approved by 156 lawmakers in the 300-seat chamber, caused an outcry by local governors, who met Prime Minister Alexis Tsipras on Saturday to seek an explanation about the necessity of the action.

"We got assurances that the measure is an emergency and temporary one, so it will become optional in a short time," the head of the Greek group representing local government officials, Kostas Agorastos, told reporters after the meeting.

"Since he (Tsipras) talked to us honestly, and since our country needs this negotiating tool now for the negotiations to be completed, we will give it this tool," he said.

Just weeks away from running out of cash, Athens has been tapping the cash reserves of public sector entities through so-called repo transactions to cover its needs.

On Monday it ordered entities including local governments to lend spare cash to the state while it tries to reach a deal with skeptical foreign creditors on new financial aid.

"The state is committed to paying salaries and pensions," the government's parliamentary speaker, Nikos Filis, told lawmakers, defending the legislation. "The money will be earning better interest rates (than what banks pay)."   Continued...

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