It looks as if Greece has a Plan B should negotiations with Troika for the sixth bailout tranche will fail tonight, or tomorrow, or… Rumors claim the state has money until October 13th 2011. So how will salaries and pensions will be paid? Read below:
Greece has Sufficient Fund until October 13
Greek government prepares plans to postpone payments, raise higher amounts through bond issues and sale of shares and bonds to increase available funds.
Government executives claim that Greece unveils a plan to enhance liquidity. But they admit that the amount of cash is kept a top secret by the Treasury, although several sources speak of sufficient funds to meet needs until October 13.
According to the worst scenario, if negotiations for the country’s funding and liquidity enhancing plan delay, the payment of salaries and pensions could be postponed. To avoid such a possibility, the Greek government develops a plan that includes:
*More auctions of treasury bills and larger amounts to be auctions in exchange for higher interest rate.
*Postponing payments to contractors, suppliers and all expenses that are not considered absolutely necessary.
*Lower grants to pension funds, which are called to make use of existing cash reserves or proceed with sale of financial assets.
*Revenue from privatization.
Greece had anticipated the sixth instalment of €8 billion on September 15, while the next instalment in December amounts to €5 billion.
(source: Economic News Portal Capital.gr)
Troika Negotiations
The same source reports, that the Greek government has in fact agreed with Troika’s demands on public spending with harsh cuts in the public sector, like trimming down over 55,000 people for 2011 and the same number in 2012. However Greeks insist to except teachers, professors and hospital doctors and personnel, irking schools to be left without teachers and the health sector without doctors. The Troika does not seem to accept horizontal cuts in salaries for the benefits of school and health sector.
Also benefits of civil servants will be cut. Taking into consideration that public servants benefits double the monthly salary, the cuts can be 30% to 50% and thus as of October 1.
More short term debt to avoid drowning in the long term debt? Is that smart? In 6 months time we will have to pay the long term debt AND the short term ones in one go… That’s a disaster waiting to happen.
It’s total junky behaviour. Quickening the shots to avoid the pain now… But ok, tell that to the pensioner who needs to eat next month.
They keep on trying to plug one whole with the next. I feel the sudden urge to go and light a candle for us all… 🙁