Greece Breaking: Athens Caretaker Government Forced to Raid Recapitalisation Budget to Keep Going

By John Ward

The Slog has learned that Greece’s Accounting Office produced an internal briefing paper this week warning that tax revenues are likely to miss hoped-for targets by some €1.35 billion. While some of what follows has been reported in the newspaper Kathimerini, the real rate of decline in tax receipts has been understated.

The decline in tax receipts has taken off exponentially since the ‘victory’ for the anti-Brussels Accord Parties. A proportion of Greek taxpayers – estimated at a staggering 27% – has been withholding all tax payments in the hope that such demands might be withdrawn under a future anti-bailout Government.These and other equally horrific realities were laid before a meeting led by Finance Minister Giorgos Zannias yesterday (Thursday) at the State General Accounting Office, when it was made clear to attendees that given the delay in the collection of tax revenues – and the possible extension to the deadline for the submission of tax statements by at least 15 days, the use of the HFSF funds would seem now to be “imperative”.

This is what happens when politicians kick cans down the road – in order to clear their immediate road to re-election.

The new information I’ve received also helps to explain massive bank withdrawals in Greece, in that Finance Minister Giorgos Zannias two weeks ago broadcast to say those suspected of owing the most taxes would have the money taken from their bank without prior warning. Hence the desire to withdraw funds. It should not be imagined that only your average superstitious peasant is withdrawing deposits: I’m told with a degree of certainty that most of the funds belong to the richer sectors of Athenian society. “Quite a bit of it is propping up the London property market,” said one source.

Thus the Greek Finance Ministry is on the verge of raiding funds that the Hellenic Financial Stability Facility (HFSF) has at its disposal, in order to secure desperately needed cash for the state’s acute cash-flow problem. (Slogposts recently have focused on the inability of hospitals to reimburse pharmacies). The HFSF contains roughly €3 billion earmarked for recapitalisation of the country’s credit system, but the State does have the authority to use it under extreme duress to cover its own obligations.

Does this change the opinion expressed by The Slog earlier today that Germany will leave the eurozone before Greece does? On the contrary, it confirms my view: while Greece is dependent (in the worst sense) on intravenous money at the moment – and convinced that it cannot survive without it – Berlin knows perfectly well that this situation is only going to get increasingly expensive: and in the older biblical sense, it would far rather be without it.

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