If Greece Clinches Last-gasp Deal, Who Will Supply Money For IMF?

July 8, 2015 Nemes Money

BRUSSELS Greeces European creditors are playing a game of pass-the-parcel about who ought to stump up the moneythe cash to avoid a default at the end of June if Athens clinches a last-gasp deal today on a plan of reforms to open frozen bailout funds.Greece should repay the International Monetary Fund(IMF)1.6 billion euros ($1.8 billion )by June 30 or be proclaimed in default, potentially triggering capital controls to avoid a bank run and pushing it closer to an exit from the euro zone.However, euro zone governments say it is currently too late

to launch the 7.2 billion euros left in Greeces bailout before the end of the month, since national parliaments would only authorize the disbursement once the Greeks pass laws to enact their reform assures-a process understoodcalled prior actions.Another possible source of fast funds would be for the European Central Bank to let the Greek government offer more short-term Treasury expenses to Greek banks and others. Greek Prime Minister Alexis Tsipras has actually consistently appealed to ECB President Mario Draghi to loosen up the noose on Greece in this way.But Draghi, dealing with strong opposition from hawks in Germanys Bundesbank and its allies on the ECB governing council

, has stated the bank would just permit more T-bill issuance once it was sure the member states would pay out the frozen aid. That, too, would come far too late for the June 30 deadline.That leaves two other pots of cash that could be utilized to give Greece a lifeline

to pay off the IMF: 1.9 billion euros in revenuesbenefit from ECB holdings of Greek government bonds purchased in 2010-11, which were gone back to euro zone member states; or 10.9 billion euros in loans set aside for recapitalising Greek banks, which are being held by the euro zone rescue fund. Either of those amounts could be launched by a consentaneous agreement of the Eurogroup of euro zone finance ministers without previous

parliamentary permission, EU sources said.JUST ENOUGH Of the two, the SMP earnings -from the acronym of the ECBs now-defunct Securities Markets Program-seems the most likely, diplomats

state. That is

due to the fact that the moneythe cash has actually already been promised to Athens in 2012 if it completed its bailout program, but likewise due to the fact that

it is just enough to keep Greeces head above water without giving the Tsipras government any modification to spend.Greece laid legal claim to the bigger amount in the so-called Hellenic Financial Stabilisation Fund(HFSF)early this year, but euro zone ministers exasperated by Tsipras anti-austerity rhetoric made Athens restore the cash, stating that it was for bank recapitalization and not general government funding. A statement agreed by the ministers in February made launching either sum topic to rigorous conditions. In theory, the transfer of the 2014 SMP revenues is conditional on the conclusion

of the bailout evaluation, accredited by all 3 financing organizationsloan provider-IMF, ECB and European Commission-and the approval

of the Eurogroup.As for the HFSF cash, it was made based on a request by the ECB and its banking supervisory arm.EU officials say some of that quantity could be released after Greece completes the previous actions, showing its willingness to turn reform assures into legislation.That would give Athens money to redeem some 6.9 billion euros in bonds held by the ECB that grow in July and August. Plainly, if theres an offer, someone will have to develop the money to pay off the IMF, an individual knowledgeable about the arrangements stated.

But each organization is taking a look at the other and stating: After you … No, after you.(Additional reporting by Renee Maltezou and Jan Strupczewski; Writing by Paul Taylor; Editing by Kevin Liffey)


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