After The ECB rejected a proposal by Greece to delay 1 month
a EUR 3.2 bn bond repayment, Athens issued
EUR 5 bn worth of 13 wk T-Bills August 14, including non-competitive bids, which
was bought by local banks on a meager 1.36
x cover ratio (the worst to date) which really shows that even short term
financing is becoming difficult. These banks will probably use the T-Bills as
collateral with the Greek central bank to access its emergency liquidity assistance
(ELA).
Below is the current schedule of T Bills redemption until
year end, i.e. EUR 15.2 bn.
The situation remains
most precarious. The lack tax collection, in particular due to a continued
fall in the GDP y0y and to some extent persistent fraud, does not bold well for
the Greek budget. The debt is again on
the increase with a sharp EUR 23 bn QoQ: after investors wrote-down EUR 105
bn in March, reducing the debt to EUR 280 bn, end of June it was back above EUR
300 bn at 304 bn.
The budget execution
is rather dismay, revenues being 24% behind plan for the period
January-July 2012. Looking at it in more details, the PIB item is again manipulated this year in the turn EUR 1.4 bn to
present an acceptable bottom line picture.
Despite the debt write-down, interest payments remain as
elevated as last year but in line with the budget.
With no GDP improvement in the foreseeable future, and the
troika requesting EUR 11.5 bn additional spending cuts in order to provide further
financial assistance, the squeeze will continue on the population. This being
said, even if Greece does not abide by its commitments, I have no doubt that
they will get additional financial aid from the EZ (In my opinion the objective
is until the 2013 German elections, but I doubt markets will allow it without
the ECB jumping in full gear by buying EZ sovereign debt in the primary and
secondary markets with no limit).
Source:
Greek Ministry of Finance: Budget Execution Bulletins
Posts
