Blog Post

Will Greece run out of cash?

For many weeks now it has been regularly reported that Greece will run out of money if an agreement is not reached with the official lenders in the next few days. So far this has not happened. 

By: Date: April 17, 2015 European Macroeconomics & Governance Tags & Topics

For many weeks now it has been regularly reported that Greece will run out of money if an agreement is not reached with the official lenders in the next few days. So far this has not happened.

Given the huge stock of financial assets the Greek government has, I am always cautious about reports that it will soon  run out of cash.  At the end of September 2014, the Greek government had assets worth €86.6 billion (Table 1). The data is unfortunately outdated, and assets have most likely been depleted significantly during the past six months.  Some of the deposits are earmarked for banking issues. It may be difficult to sell some of the equity holdings, in particular bank shares.

Still, even if the €86.6 billion has declined by a dozen or two, and even if not all of the remaining assets could be easily used to pay for obligations, there is still a lot, and much more than the €30 billion assets the Greek general government had at the end of 1997 (Figure 1). As a share of financial assets in GDP, Greece ranked seventh among the 28 EU countries in September 2014 (Figure 2), so asset holdings were relatively high in a European comparison too.

Greece has looming repayment deadlines: as Silvia Merler recently showed, Greece has to repay €6.7 billion to the ECB and €9.8 billion to the IMF in 2015. (There are also maturing treasury bills, but these are rolled over by the largely state-owned Greek banks). Greece also has to pay some interest on its liabilities, though not that much, because interest payments on EFSF loans (the largest creditor of the country) are deferred (see my earlier post on Greek interest payments here).

The question is therefore whether the primary budget surplus and the possible liquidation of some financial assets would be sufficient for the Greek government to carry on paying financial obligations until an agreement is reached with the creditors in the coming weeks or months. My guess is yes, at least perhaps till the summer, when large repayment will become due.

Table 1: Greece – Financial assets of the general government and the three government subsectors, consolidated, million euro, September 2014

Figure 1: Greece – Consolidated financial assets of the general government, € millions, December 1997 – September 2014

Figure 2: Consolidated financial assets of the general government, % of GDP, September 2014


Republishing and referencing

Bruegel considers itself a public good and takes no institutional standpoint. Anyone is free to republish and/or quote this post without prior consent. Please provide a full reference, clearly stating Bruegel and the relevant author as the source, and include a prominent hyperlink to the original post.

View comments
Read article More on this topic

Blog Post

MariaDemertzis1 bw
sd-12177-_0028bea2-web

Bruegel conference discusses strategies to tackle Europe’s NPL crisis

Bad loans and private sector debt distress are widely acknowledged to hold back investment and growth in Europe. It was good, then, to hear ECB Vice-President Vítor Constâncio call for a comprehensive strategy to address the non-performing loans problem at an event hosted by Bruegel last week.

By: Maria Demertzis and Alexander Lehmann Topic: Finance & Financial Regulation Date: February 7, 2017
Read article More on this topic More by this author

Blog Post

Silvia Merler

The strange case of the MPS capital shortfall

Italy's banking saga continues with the announcement that beleaguered MPS may need to find an additional €3bn. What exactly has changed, and what does it say about ECB decision making?

By: Silvia Merler Topic: Finance & Financial Regulation Date: December 27, 2016
Read about event More on this topic

Past Event

Past Event

Game Over – The Inside Story of the Greek Crisis -Drawing the broader lessons for Europe

Solvay Brussels School and Bruegel are co-organizing an event at which George Papakonstantinou and André Sapir will discuss the Greek crisis and its social and economical impact over the last 6 years.

Speakers: André Sapir, Guntram B. Wolff and George Papakonstantinou Topic: European Macroeconomics & Governance Location: Avenue Franklin Roosevelt 42 Brussels, 1050, Ixelles Date: December 6, 2016
Read article Download PDF More by this author

Policy Contribution

pc-23-12European Parliament

The impact of the legal and operational structures of euro-area banks on their resolvability

Following the financial crisis, the question of how to handle a big bank’s collapse has come to the fore. This Policy Contribution evaluates the obstacles to resolvability that the legal and operational structures of the large euro-area banks could pose to the European Union’s new resolution regime.

By: Dirk Schoenmaker Topic: European Parliament, Finance & Financial Regulation, Parliamentary Testimonies Date: December 6, 2016
Read article Download PDF More on this topic More by this author

External Publication

cover-ep

The impact of the legal and operational structures of euro-area banks on their resolvability

This paper evaluates the obstacles to resolvability that the legal and operational structures of the large euro-area banks could present, assuming that it is possible to liquidate smaller and medium-sized banks through a transfer of the relevant activities to other banks.

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: December 6, 2016
Read article Download PDF

Working Paper

cover

Reform of the European Union financial supervisory and regulatory architecture and its implications for Asia

This Working Paper reviews recent developments in the EU’s financial supervisory and regulatory architecture with a view to draw out lessons for regional financial regulatory architecture in Asia.

By: Zsolt Darvas, Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation, Global Economics & Governance Date: November 17, 2016
Read article More on this topic More by this author

Blog Post

Nicolas Véron

Not so low: A review of Paul Blustein’s book on the IMF and the euro area crisis

"Laid Low" is an important addition to the burgeoning literature on the euro-area crisis and its main contribution is to assemble essential factual material for further analysis.

By: Nicolas Véron Topic: European Macroeconomics & Governance Date: November 3, 2016
Read article More on this topic More by this author

Blog Post

sd-12177-_0028bea2-web

ECB bank supervision cannot tackle debt restructuring single-handedly

The European Central Bank has begun to tackle a key symptom of banking sector fragility with its proposed guidelines on banks’ management of non-performing loans (NPLs). But detailed targets for the reduction of NPLs and prescriptions for the internal governance and management of distressed assets also represent a new style of more intrusive supervision. For the ECB to succeed in bank rehabilitation, a macroeconomic scenario should guide the deleveraging process, capacity needs to be built, and governments will need to support a more holistic restructuring effort.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: October 13, 2016
Read article Download PDF More on this topic

Policy Contribution

pc-17-16

Fiscal capacity to support large banks

This Policy Contribution outlines a fiscal cost scenario for the recapitalisation of large banks during a severe systemic crisis.

By: Pia Hüttl and Dirk Schoenmaker Topic: Finance & Financial Regulation Date: October 3, 2016
Read article More on this topic More by this author

Blog Post

Nicolas Véron

The IMF’s performance on financial sector aspects of the euro area crisis

The recently published in-depth evaluation of the International Monetary Fund (IMF)’s role in the euro area crisis highlights important contrasts in the area of financial services. The IMF provided highly valuable analysis and recommendations to the EU on its banking sector and related policies. In individual countries (leaving aside Cyprus and the second Greek programme, not covered by this evaluation), the financial-sector aspects of the IMF’s interventions were highly successful in Ireland and Spain, ambiguous in Greece, and a missed opportunity in Portugal.

By: Nicolas Véron Topic: Finance & Financial Regulation Date: August 29, 2016
Read article Download PDF More on this topic More by this author

Policy Contribution

cover pc 13 16

The IMF’s role in the euro-area crisis: financial sector aspects

Nicolas Véron reviews in-depth the role played by the IMF in understanding the financial-sector dynamics of the euro-area crisis. The IMF was the first public authority to acknowledge the role of the bank-sovereign vicious circle and to articulate a clear vision of banking union as an essential policy response. At national level, the IMF’s approach to the financial sector was appropriate and successful in Ireland and Spain, more limited in the Greek Stand-By Arrangement, and less compelling in Portugal.

By: Nicolas Véron Topic: Finance & Financial Regulation Date: August 29, 2016
Read article More on this topic More by this author

Blog Post

Schoenmaker pic

Losing “EU passport” would damage City of London

If the UK cannot secure a “Norway” deal and stay within the internal market, the UK will lose the passporting rights which make London attractive as a financial centre. The macroeconomic fall-out from Brexit has also damaged the performance of banks and insurers.

By: Dirk Schoenmaker Topic: Finance & Financial Regulation Date: June 28, 2016
Load more posts