ATHENS: Greece floated yesterday a proposal to roll over ¤4.5bn ($6.1bn) in debt next year fill a budget gap that has sparked concern Athens will need a new bailout, but a senior ECB official immediately ruled out such a move.
Speaking ahead of a meeting of eurozone finance ministers in Luxembourg, European Central Bank executive board member Joerg Asmussen said there was “no way” the gap could be covered by bond rollovers.
“There is a financial gap for the second half of 2014 of about ¤5-6bn,” Asmussen said. “There is no way it can be covered by bond rollovers (which could contravene ECB law),” he said.
Instead, he urged Greek authorities to find alternative means to cover the shortfall, such as through the state’s lumbering privatisation programme.
Speaking to business daily Naftemporiki, Finance Minister Yannis Stournaras had earlier said the operation would allow Greece to meet ¤4.4bn ($5.4bn) in 2014 loan repayments that EU-IMF creditors are worried the country cannot afford.
The impending financing hole, which could rise to ¤10.9bn by 2015, is a big concern to the so called troika of creditors — the European Union, European Central Bank and International Monetary Fund — which are in the midst of deciding further loan releases to the cash-strapped Greek government.
But with state revenue still far short of planned spending, the Greek government is also looking for ways to afford day-to-day spending in 2014 without forcing more austerity on Greeks living through a sixth year of recession.
While the troika believes the budget shortfall is an alarming ¤4bn, the Greek government estimates it at about half that — some ¤2.2bn — which Stournaras said could be met by measures such as reducing red-tape.
For next year, the Greek government has forecast that it will reach a primary surplus, the balance of state spending that does not include debt payments.
Stournaras also said that he expected the ECB would extend maturities on Greek bonds in its possession, as part of an EU agreement last November that extends further assistance to Greece in return for progress on its fiscal belt-tightening.