Gov’t eyes tranche frontloading
Funds cashed in immediately could reach 8.1 billion euros to cover the financing gap up to mid-2014
Provided thatthe inspection of its streamlining program comes to a successfully conclusion, Greece can hope that the next bailout tranche will total 8.1 billion euros, as the eurozone is examining the option of disbursing to Athens the installments for the third and the fourth quarter of the year immediately.
That way a major part of the funding gap will be covered, allowing the International Monetary Fund to continue to support the Greek program as the funding of the country will be secured for the next 12 months. The eurozone expects that this will ease IMF pressure for an immediate haircut on Greece’s debt to the official sector. According to sources, more than half of the total 8.1 billion euros is the 4.2 billion from the eurozone and the European Central Bank. Of this, the amount of 3.1 billion concerns the last couple of installments for 2013 (700 million for the third quarter and 2.4 billion for the last). The other 1.1 billion euros concern the ECB’s profits from Greek bonds bought during the crisis to support the Greek bonds market. This has already been approved on a political level and Athens is expecting its disbursement.
Another 1.8 billion euros will come from the IMF, which is the Fund’s share in the installment for the second quarter of the year. An additional 2.1 billion euros could come from the bonds bought by national central banks from the eurozone on the secondary market.
With that 8.1 billion, Greece would would be able to safeguard the coverage of its funding gap not only for 2013 but also up to mid-2014. This shortfall was created by the apparent failure to collect 2.6 billion euros from privatization revenues and from the non-implementation of the Eurogroup decision for the postponement of payouts of matured Greek state bonds that the national central banks had acquired before the crisis erupted. The latter was a decision that was never applied. Greece continues to pay for the bonds that have matured and the Eurogroup has not yet found a solution to that problem.