The Greek government has dismissed a media report saying that it was planning to sell billions of euros of social security contributions owed to its pension fund to private investors.
Citing senior government officials, international news agency Reuters reported late on Thursday that “the first batch of up to 12 billion euros ($13.22 billion) of legacy arrears out of about 35 billion on the social security system’s books” are to be sold to get cash upfront and facilitate recovering other receivables.
“There is a strategy to sell arrears the state social security system has not managed to recover in past years,” one of the government officials told Reuters.
The arrears represent social security payments for staff owed to pension funds by private companies in Greece, partly because of the country’s debt crisis.
The project is reportedly “headed by Deputy Labour and Social Affairs Minister Notis Mitarachi, will look into selling a first batch of up to 12 billion euros ($13.22 billion) of legacy arrears out of about 35 billion on the social security system’s books.”
The process will not involve securitization because issuing asset-backed securities may be treated as borrowing and face obstacles with Eurostat, the European Union’s statistics service that harmonizes statistical methods across its member states, one of the officials said.
Instead, the government will look into selling the arrears to private investors for a cash down payment and agree a profit sharing scheme from any recoveries. Selling such arrears will be done at discounts to the nominal value.
According to the news agency, “the project will set Dec. 31, 2014 as a cut-off, meaning it will try to sell off arrears accumulated up to that date. It will focus on amounts owed above 100,000 euros. It will not include arrears which already have a repayments plan or arrears of the self-employed.”
Labour Minister Yannis Vroutsis issued a statement denying that there was a plan to sell arrears worth 12 billion euros. The government officials, who spoke to Reuters, stood by their comments.
They said the state aims to fine-tune the process by the end of this year and proceed with preparatory work in the first quarter of next year so that sales can take place in the second quarter of 2020. The government is also looking for an adviser for the project, reuters wrote in its update report.
PS for some weird reason, Greeks on social media seem to believe more the Reuters report than the minister’s statement. Friday morning… Hear! Hear! According to Greek media, it was a deputy Labor Minister who leaked the issue to the news agency.
In a parallel development, the government sent a letter to the Financial Times asking to take down a report about the amended Penal Code and Money Laundering, gov’t spokesman Stelios Petsas said on Friday morning.
