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Greece orders Public Sector & Municipalities to transfer cash to BoG with emergency decree

Struggling for cash Greece could not avoid to put its hands into state reserves and with an emergency decree it orders public institutions and municipalities to transfer their capital assets to the Bank of Greece. According to a legislation act signed by the President of the Greek Republic and without approval by the Parliament, the coalition government decided to proceed to the unprecedented: to order public institutions to transfer their money to a special account at the Bank of Greece.

Exempted from this obligation are assets needed to cover expenses for the next two weeks.

Assets transfer to BoG

 

Emergency Decree dated 20. April 2015, signed by President of the Republic Prokopis Pavlopoulos and published in the official Government Gazette here.

According to Bloomberg,

“The decree to confiscate reserves now held in commercial banks and transfer them to the central bank could raise about 2 billion euros ($2.15 billion), according to two people familiar with the decision.”

However according to Greek media, the government expects some 3.5 billion euro.

With this decision the government expects to fulfill its obligations towards the creditors especially towards the IMF until July 19th 2015, pay wages and pensions.Revenues have been decreased due to Easter holidays.

“The transfer exempts social security funds,” government sources told media adding that only institutions that receive funding by the state budget will be obliged to transfer their cash assets. “This is a common practice in many European countries,” the government sources said.

The government could use this money to issue short-term repos.

The decision has been sharply criticized by opposition parties with some conservative lawmakers to want to sue the government for this.

Greece has come into status of “economic asphyxiation” after having to serve loans to IMF without bailout funding. Last time creditors poured financial injection to Greece it was in August 2014.

The last bailout tranche of 7.2 billion Euro is due but creditors do not show any sign of willingness unless Greece accepts all creditors’ demands for further austerity measures.

PS that’s not a development I could describe as “positive”.

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One comment

  1. The local authorities are reluctant to send there money to the greek state showing how little trust they have in their own country.
    Greek citizen withdraw billions and billions month after month, showing how little trust they have in their own country.
    Greek companies are stopping their vat and social contributions, showing how little trust they have in their own country.
    At the same time Greece expects the rest of the world to trust them with more billions when their own society refuses to do so.
    Weird!