Greek PM hits out at ECB over cash squeeze

Hélène Colliopoulou
1 / 3

Figures depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel are pictured during the traditional rosemonday carnival parade in the western German city of Duesseldorf on February 16, 2015

Figures depicting Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel are pictured during the traditional rosemonday carnival parade in the western German city of Duesseldorf on February 16, 2015 (AFP Photo/Patrik Stollarz)

Athens (AFP) - Greek Prime Minister Alexis Tsipras has accused the European Central Bank of holding "a rope" around the country's neck as Athens scrambled Friday to avert a looming state default.

The ECB "is still holding the rope which we have around our necks," said Tsipras, according to excerpts of an interview with Germany magazine Der Spiegel to appear Saturday.

The remark came after Athens this week received no help from the Frankfurt-based institution to address a cash squeeze caused by the non-delivery of promised loans.

Athens is scrambling to find cash to address a daunting repayment schedule, with over 6.0 billion euros ($6.8 billion) falling due this month.

Tsipras, who will travel to Paris and Brussels next week, warned of a "thriller" over Greek finances unless the ECB backs down.


- Return of the 'thriller' -


The new leftist premier said Athens wanted permission to issue additional short-term bonds called treasury bills, and if the ECB refuses "the thriller we saw before February 20 will return."

He was referring to a terse standoff between Athens and its international creditors before a compromise agreement was signed by eurozone finance ministers on February 20.

Tsipras will meet European Commission chief Jean-Claude Juncker next week, though the prime minister's office said the discussions would be on how to "utilise European funds to address the humanitarian crisis and unemployment."

Tsipras, who will be in Paris on March 12 for talks with the OECD, will also meet European parliament chairman Martin Schulz in Brussels on Friday, the latter's office said.

Meanwhile a finance ministry source on Friday said Athens had repaid the International Monetary Fund a first debt instalment of 310 million euros.

Greece will seek to raise 1.0 billion euros in three-month treasury bills on Wednesday, the debt management agency said.

Greece's new anti-austerity government last month reluctantly agreed to temporarily extend its EU-IMF bailout, but until Athens wins approval for its plans for a four-year economic recovery blueprint it has no access to the funds remaining in its 240-billion euro rescue programme.


- Greeks to make proposals -


The government has said it will present a first batch of concrete proposals to eurozone ministers on Monday in a bid to break the deadlock.

The proposals include creating a "flexible", temporary tax audit squad, and amend laws on electronic gaming and the repayment of debts to the state to maximise revenue.

"It is very important that the Eurogroup be successful. We are all working to this end," Bank of Greece governor Yannis Stournaras told reporters after seeing the prime minister.

He added that the government would work "non-stop" over the weekend to secure a "positive result" on Monday.

The government had pinned its hopes on the ECB giving more leeway to Greek banks to buy state bonds.

But the ECB on Thursday maintained a tough line on Athens, saying it was prepared to give more room on financing once the Greek government reaches a debt deal with its eurozone partners.

The ECB recently cut off a key channel of financing for Greek banks, saying it would no longer accept Greek sovereign bonds as collateral for loans.

That means they now rely solely on emergency liquidity assistance (ELA) which is more expensive than normal central bank refinancing operations.

ELA funds are also limited by the ECB, as well as the amount of short-term treasury bills that Athens can issue.

Stournaras insisted Friday that Greek banks are "sufficiently capitalised" and have "secure liquidity".

"There is no danger... there is no, absolutely no problem with deposits," he said.

There have been concerns that without ample support from the ECB that Greeks could view the banks as being vulnerable, triggering a run on deposits that could provoke a crisis leading to Greece's exit from the euro if no help was forthcoming.

The head of the European Stability Mechanism, Klaus Regling, on Friday expressed concern about the state of Greek government coffers and urged Athens to concentrate on tax collection as revenues were "plummeting."

"We are left to hope that the government will soon pull the emergency brake. It must urgently explain to its citizens that they must pay their outstanding taxes," Regling told German business daily Handelsblatt.

burs-hec/jph/bo