Greece awarded financial breathing space with €550m lifeline

By Mehreen Khan 10 March 2015

Athens will be allowed to take back more than half a billion euros in rescue funds as it struggles to meet debt repayments

Greece's Leftist government faces loan redemptions of €1.3bn to the International Monetary Fund over the next 20 days Photo: Bloomberg

Greece's cash-strapped government will be able to tap more than half a billion euros in bank rescue funds, easing the pressure on the country as it scrambles to meet loan repayments due later this month.

Following a revision of the Eurozone's financial backstops, Athens will be eligible to receive more than €550m (£390.7m) from the Hellenic Financial Stability Fund (HFSF) - a bank rescue vehicle used to recapitalise the country's stricken lenders in 2012.

Klaus Regling, head of Europe's financial rescue fund, said the money was originally paid in by Greek banks before the country's bail-out in 2010, and creditors "had no legal claims" on it.

The cash injection could now help alleviate the squeeze on Greece's Leftist government, which faces loan redemptions of €1.2bn to the International Monetary Fund over the next 20 days.

Greece's economy minister told The Telegraph last month that his government had a number of options to stay solvent until April.

The government has touted plans to raid pension funds held at the central bank to meet its obligations to the IMF.

According to government officials quoted in the Financial Times, Syriza needs to find €1.5bn by the end of the month in order to make government wage and pensions payments.

Eurozone officials fear Greece could run out of money in a matter of weeks, amid a climate of deteriorating tax revenues and capital flight from its banks.

Greece's international creditors have tightened the noose on the nascent Syriza government in recent days.

Jeroen Dijsselbloem, head of the Euro group, warned the country to hasten the implementation of economic reforms in a bid to release the vital €7.2bn in bail-out funds needed to keep Greece afloat until June.

The European Central Bank has also taken a tough line with Athens, banning the acceptance on Greek bonds as collateral for its cheap loans.

Greece is now asking the ECB to raise the cap on the emergency funding (ELA) it provides to the country's banks as capital has fled the country.

The ECB could provide some relief for lenders at an emergency meeting to discuss ELA on Thursday, according to Bloomberg.

Greece awarded financial breathing space with €550m lifeline - Telegraph