What the Next Two Weeks Holds in Store in the Greek Crisis Saga

Athens, Greece
People sit at the foot of Acropolis Hill in Athens, Greece. Photographer: Kostas Tsironis/Bloomberg

A euro area finance ministers meeting over the disbursement of bailout funds ended in acrimony on Friday, as creditors expressed frustration with the country’s refusal to comply with the terms attached to its emergency loans.

While focus now turns on a May 6 interest repayment to the International Monetary Fund and the next Eurogroup meeting on May 11 in Brussels, the country has a number of funding hurdles to clear before then and beyond.

From Monday through to the end of the month, the government needs to pay pensions and salaries to civil servants and retirees. The country’s alternate finance minister, Dimitris Mardas said Wednesday there’s not enough cash in state coffers to meet these obligations, unless local authorities comply with a decree ordering them to transfer reserves to the Bank of Greece for short-term financing of the central government.

A public holiday on May 1 will give the government a brief stay over payment of about 200 million euros interest payment to the IMF. As the deadline coincides with the holiday, followed by a weekend, the payment can be delayed until May 6, two days after it receives payment notification, a person familiar with the matter said.

The European Central Bank’s Governing Council will also hold its weekly reviews of the liquidity situation of Greek lenders, where additional Emergency Liquidity Assistance is approved. At the last meeting on April 22, it increased the available pool by 1.5 billion euros to 75.5 billion euros, indicating the standoff continues to aggravate deposit flight.

Patience is wearing thin among some governing council members with the ELA lifeline amid fears that the standoff threatens the solvency of Greek banks. At their May 6 meeting they will debate whether to raise the haircut on Greek collateral posted for ELA, a decision that could further intensify the country’s liquidity squeeze, according to another person familiar with the matter.

The government also needs to sell short-term debt on May 6 to refinance 1.4 billion euros of six-month treasury bills maturing two days later.

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